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6 steps to getting your family finances on track

What we'll cover

  • How to identify your family's values and goals

  • Ways to teach your kids about financial goals

  • How to stay engaged with your goals

When it comes to managing household finances, making it a family affair can offer two meaningful benefits: instilling solid money habits early for your little ones and helping everyone in the family understand not only what you might be saving for but why as well.

In a new survey of Ally customers, we found less than a quarter of parents said their own parents explained money and finances to them growing up, while a whopping 55% learned on their own, either through trial and error or doing their own research.

The good news is nearly as many parents seem to be breaking that communication barrier with their children today. Among parents of children ages 5-9, 46% said they speak to their kids weekly about finances, while 51% of parents with children ages 10-14 said they cover finances weekly and 49% of parents with kids ages 15-17 do the same.

Still, talking to kids about money is easier said than done right? Check out the tips below to get the conversation going.

#1 Identify your family’s financial values.

One of the first questions a financial planner will ask is “what do you value most?” Establishing what gives you the most joy and fulfillment will help you align the way you are saving and spending with what truly adds value to your life.

The “what do you value most?” question may draw a few blank stares from the peanut gallery. If so, here are a few conversation starters to guide your little ones:

  • Having a safe and comfortable home

  • Spending quality time with each other

  • Helping your community (volunteering at church, civic associations, etc.)

  • Getting a great education

  • Giving back to select causes

  • Staying physically fit, healthy and active

Once your family has decided on your values, write them down in order of importance and put the list somewhere visible. This will help your kids understand WHY the family is making certain financial decisions or prioritizing things in a certain order.

#2 Talk about how you spend money as a family and whether it aligns with your values.

Log into your bank account or download your latest credit card statement. Isolate the last 30-60 days in your family’s spending and look at where the most money went. If this is tricky, a budgeting app might help you visualize spending categories a bit more easily than the manual approach.

Next take that spending record and get everyone involved in aligning the purchases with your family’s values. Spoiler alert: some may not. Which leads to maybe the most uncomfortable part, talking about which categories do and don’t line up with the family values you prioritized in step #1.

Who needs an eight-year-old to question Daddy’s daily Starbucks habit, right? But treating your kids like “grownups” and talking about how much certain items or services cost can help them process and understand the connection between the money the family earns and how it gets dispersed.

#3 Set family savings (and spending) goals.

Image shows a family chart of what they are saving for and includes categories for: education, emergency fund, pets and vacation.

Now that you have your family values established and know where you’re spending, it’s time to dream. Ask your kids what personal financial goals they’d like to achieve over the next few months or even this year. Point back to your family values if some of their goals seem out of alignment. Once you have a list of the family’s savings goals, discuss which ones take priority (i.e.: get the biggest share of savings) and which should be set aside until later.

Remember if you can visualize your goals, you’re more likely to achieve them. This is where a useful tool like Ally Bank Savings Account buckets can come in handy. Savings buckets allow a savings accountholder at Ally Bank to name up to 30 different “buckets” within their account. Seeing is believing – especially when it comes to saving. Help the kids name the family vacation bucket, the school fees bucket, the summer camp bucket, the rainy-day fund bucket, or even a bucket for a new pet (!).

#4 Teach financial resiliency along with financial literacy.

There’s no question. In today’s economy, keeping food on the table and a roof over your family’s heads takes priority over savings goals. But if you’re going through a financial struggle, how much should you share with your kids? After all, children already are dealing with being cooped up at home, virtual school and missing friends.

It’s every adult’s choice how much detail to give kids about money issues the family might be weathering. Chances are, however, your children already have sensed your stress. Sharing how the family is going to make ends meet in the face of adversity can help teach children how to tackle obstacles, recalibrate and find creative ways to bounce back.

While your family plans and financial outlook may change, ultimately your family’s values should remain the same. A family trip to Disneyland would be nice. But if the family value you’re hoping to achieve is exploring new places and spending quality time with one another, brainstorm affordable adventures closer to home, like a road trip to a national park or the local zoo. Or consider spending time as a family putting together a modest care package for an essential worker in your life as a token of gratitude.

#5 Teach older kids the power of investing and planning for long-term goals.

Helping kids understand how to differentiate between short-term and long-term savings goals can jumpstart a conversation about the power of saving and investing early and often. You can explain that opening an Ally Bank Savings Account in your child's name make sense for a summer camp deposit that’s due a few months from now. But squirreling away funds for college tuition might be better suited for a Roth IRA or a brokerage account like Ally Invest. Or with an Ally Invest custodial IRA, parents can manage the account until the child is 18 or 21 years old (depending on state laws).

#6 Celebrate the wins every step of the way.

Keep your family invested in the goals you’ve set together by focusing on the positives. Make your goal-tracking a fun family event weekly or monthly. Get a piece of poster board or use part of a discarded cardboard box from the recycling bin to track your progress visually in a place where the family typically gathers like the kitchen or den. Cheer one another on for clever ways you’ve managed to trim expenses or bring in additional income to help support the family’s goals.

If progress has been derailed by unforeseen circumstances, like job loss or unexpected bills, take a proactive approach to problem solving as a family. Focus on what the family can still achieve and what you're grateful for despite these challenges.

Sure, it might feel uncomfortable talking to your children about money being tight or that you need to ask for help from a family member or friend. But there is no shame in showing children how to ask for help when they are in need – that even when they don’t have an answer, they can find comfort at the family kitchen table talking it through and making a plan.

Check out a few helpful resources below and drop us a note in the comments to let us know how you’re teaching financial literacy at home.

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