A Guide to Family Financial Planning

For most people, the way money is handled has a lot to do with upbringing. In some people, the accumulation of wealth fulfills a need for security, and for others, it is a path to adventure and excitement. Below, we will discuss how the environment in which you were raised may have helped to shape your financial outlook.

Family Finance Types

Family FinanceA family’s view on finances usually falls into one of the below categories, although some families blend two or more. These categories can be described as:

Conservative – Families take an analytic approach to decision making, moving cautiously and slowly before making investments. These families tend to guard every penny and take risk management very seriously.

Stable – This kind of family likes to keep things the way they are, and tends to resist situations that require rapid adaptability. Here, tradition is honored, and those who break from the norm are frowned upon.

Extroverted – This family financial culture focuses on harmony and relationship building. Families like these don’t pay much attention to the minutiae of financial decision making, and aren’t as inclined to adhere to procedures.

Entrepreneurial – Families like these are very focused on results, preferring to make financial decisions based on details. They move quickly once a decision is made, and work automatically to maintain autonomy and control.

The types described above are general, and children don’t always follow their parents’ example. In some cases, we do the opposite – for example, if your parents were very frugal, you may continue their penny-pinching ways, or buy what you want when the mood strikes.

Your Upbringing Shapes your Habits

In large families, you may see patterns regarding financial choices. Everyone has a financial family history, and in some cases, it’s so deeply ingrained that we don’t even realize it’s there. When we know more about this history, we can make conscious choices to avoid or reinforce related behaviors.

Starting the Conversation

To see how your spending habits can affect your future, you should talk to a Financial Planning firm. A financial advisor can give you common sense tips on having the “money talk” with your parents, children and spouse – no matter what financial culture your family has.

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