Managing family finances isn’t easy. I’ve said before it can be similar to running a small business. You have to communicate and perform all the work associated with planning and cash flow management. Yes, it’s similar to working in the finance department of a small business except the team is only two people (husband and wife) strong.
Who should be resonsible for managing money
Organizations face challenges around the uncertainty of work tasks because of the lack of understanding of who should be responsible, held accountable, consulted and informed for those tasks. Families face these same challenges, but with tasks associated with maintaining and managing the family finances.
- Who should pay the bills?
- Who is ultimately accountable if the bills don’t get paid on – time?
- When experiencing financial challenges, who should the husband and wife seek for counsel, or consult with before making a big decision?
- Who needs to be kept informed about spending, upcoming expenses or the state of the finances in general?
Squash the uncertainty around money management responsibility
To squash this uncertainty, which can lead to frustration and disorganization, organizational teams will typically use a work matrix to identify the person(s) responsible, accountable, consulted and informed.
Why couldn’t the same be used for home finance management?
I recently had a conversation with someone about applying such a tool for family finances. “What a great idea”, I said! Perhaps this post is enough to start the conversation for husband and wife. Consider these questions to help bring clarity to family personal finance management.
Responsible for money management
Who is responsible for managing the family finances?
The responsibility of paying bills, managing cash flow or actual expenses against the spending plan is typically that of the family CFO (Chief Financial Officer). There is typically one person in the relationship that is more gifted in this area than the other. Most often the person will naturally assume the role.
It can get confusing when more than one person tries to assume the role, so I’m a fan of having one joint checking accounts and letting one spouse maintain it.
Accountable for money management
Who should be accountable to the financial decisions of the family?
Both spouses should be accountable for all spending decisions and management of the finances. How is it possible to be responsible for the management of the finances if I’m not the CFO, you might ask? You have to be informed as you’ll read below.
It’s also important to note that each spouse should hold the other spouse accountable for their decisions. In marriage, you become one and so do the finances. Therefore, each person is ultimately accountable to the state of the family financial picture. I think a good step in this direction is to have a joint checking account in marriage.
If you’re a Christian and you follow Biblical financial principles, you understand that God holds you accountable to His principles.
Consulted for money management
Who should provide counsel for the family?
You definitely have to be watch out for some financial counselors you choose, but every husband and wife should have some counselors they can seek for advice and direction when it comes to making big financial decisions. The counselor can also provide help or even accountability for the monthly spending plan.
Seeking counsel first from God and His word should be a priority for a Christian. Certainly husband and wife should seek each other for counsel in making decisions. Friends, family and a financial counselor can also be good sources.
Make sure when you do seek outside sources for counsel, you are going to those counselors together versus one spouse alone. Remember, personal finance is a family matter and it will separate you in this area if independent counsel is sought after. This is a common mistake when husband or wife seeks the counsel of their parents independently.
Informed of money management
Who should be informed about financial decisions?
This is a common area of issue that needs more definition for a husband and wife to communicate well about money. In the post, Talk about Money, I wrote about the need to have a weekly meeting to discuss financial matters. If you’re the CFO, you should be keeping the other spouse informed of the state of affairs on a weekly basis. Both spouses should inform one another of spending decisions and upcoming expenses that impact the overall spending plan.
Speaking of keeping each other informed, there is no room for secrets when it comes to family personal finance. Hiding spending, extra money, etc. is a serious issue that can impact trust in the relationship. I’ve heard of many friends situation in which one spouse has a credit card without the other person knowing about it. It’s not usually surfaced until the balance becomes so unmanageable that the other spouse finds out. At that point, a lot of negative emotions about the situation can impact or break up a marriage.
Final thoughts
I think almost any family personal finance task can be run through the areas of responsible, accountable, consulted and informed to help bring more clarity to managing family finances. And more clarity and communication is always a good thing to make sure husband and wife are walking together in the personal finance management.
What are common challenges with family finance management that needs more clarity around who should be responsible, accountable, consulted and informed?
|
 |
Pingback: 7 Tips To Involve Your Spouse In The Family Finances