Our families are the heart of our lives. We want our children to have endless opportunity, to be able to achieve and create and flourish. We want our parents to reap the benefits of a lifetime of hard work and live out their golden years free of worry. But too often these hopes lead us astray. We fall prey to our good intentions. We sacrifice the wrong things for the right reasons, putting our financial security at risk to make someone we love happy.
When your credit card bill is full of purchases you made because your kids asked for something, you're lying to yourself and your kids about what your family can afford. When you deplete your emergency fund to help your sister cover her chronic financial shortfalls, you're lying to yourself and your sister about whether you can afford to help her—or that you even are
helping her, rather than merely enabling her irresponsible behavior. When you tell your kids to focus on getting into the best college regardless of the cost even though you'll have to spend your retirement savings to cover the bills, you're being dishonest about the severity of that sacrifice. In each of these situations, your rationale seems irrefutable: You give out of love, because that's what family is all about, right? But the truth is, there's no way to build sustainable dreams on a foundation of financial dishonesty.
In this day and age, even families who are financially responsible are being hit by punishing economic headwinds. A layoff or a position that hasn't produced a raise in recent years can make you feel like it's becoming harder and harder just to get by. You may also find that your grown children and elderly parents need financial assistance. Combine these factors with poor returns on your retirement portfolio and a decrease in your home value, and you have real cause for worry.
Which is why the way your family spends and saves money, and how money flows through the generations of your family, may need to be revisited. For many of you, the challenge will be to rein in your family's spending. For others, the task will be to reassess your very way of life. No matter your situation, the first thing you must do is start talking. We're always more successful in reaching our goals when we have the support of those we love.
You may think having truthful conversations about your financial situation is embarrassing or painful. You may feel defeated by having to tell your son you can't afford to send him to sleepaway camp this summer, or to ask your siblings if your holiday gift giving can be pared down this year. But when you live your life with honesty, you're at your most powerful. Here is how to maintain your financial integrity as a daughter or son, a parent—of a young child, a teenager, or an adult—and a grandparent.
Next: For Parents: Teach Your Children Well