Organizing Family Dollars By Dr. Bernice Wilson, Resource Management Specialist

Contrary to popular belief it matters who is involved in managing family dollars, family finances, or how financial resources are handled in a family. Families should try to involve every member, adults and children alike, when planning family expenditures. Now, the degree to which each family member is involved will depend on the responsibilities of each person as it relates to the family's financial matters.

Total involvement from family members may eliminate unnecessary stress caused by poor money management practices. Getting a good handle on family finances could save time and evolve into making better financial decisions. By making wise money decisions and becoming more attentive to family finances, family members could avoid making costly mistakes that result in paying higher interest or service fees. What can families do to help manage their financial resources?

Families can begin by organizing financial records. Think about the trauma this could cause if the need quickly arises for information on a family member and records could not be found. If this information is critical to the success of having a financially secure future, then unorganized financial records could devastate a family. Fringe benefits are only beneficial if the proper documents are in order and can be quickly accessed. Here are some financial tips to help families better organize financial records.

• Set up a filing system and continue to maintain and update the system often.
• Designate a place in the home where current bills are kept until paid and filed.
• Protect your filing system against fire and theft.
• Rent a safe deposit box at your bank for certain documents or items that may be difficult to replace, such as birth certificates, investment papers, original contracts, and old family records. Families should not put records in a safe deposit box if those records will be needed if an emergency situation arises, including medical cards or directives.
• Get rid of unwanted papers and each family must decide what papers are important to keep. It may be wise to keep credit card receipts until those purchases are added to the credit card statement and properly verified. You may want to keep those records if needed for tax purposes. Other records should be kept for seven years, i.e., records of bond, stock, and other investments. Home improvement receipts are records that are also included in the seven-year duration.

FDIC Senior Consumer Affairs Officer Janet Kincaid said it best, "Take a little time now to develop or improve your recordkeeping system, and encourage your family members to do the same. The time you spend organizing your records now will be well worth the time and effort that could be saved in the future." (FDIC, 2005)

Surveys indicate that parents believe children should develop financial skills by participating in practical money management classes. After all, children are members of the family and should be allowed to participate in family discussions about finances as appropriate. Plan and organize your discussions to make them more meaningful. In addition, parents should also know when it is the right time to talk to children about managing money. By asking questions, parents allow children the chance to express their feelings about money. However, some flexibility is needed since children may ask questions about money at unexpected times.

Bodnar (2006) encourages parents to take the lead in helping children learn and master the following six money-management skills before leaving home:

• How to handle a cash allowance
• How to save for a goal
• How to compare prices
• How to manage a checking account and credit/debit cards
• How to appreciate the magic of compound interest
• How to get out of debt

Parents should organize the family finances and start to teach children early about money. Tobe & Heckman (2005) stated that children are born learners. In the first five years of life, children pick up a tremendous amount of knowledge about themselves and their relationships to other people and the world around them. These are just some helpful tips to help families organize their finances.

References
Federal Deposit Insurance Corporation. (Winter 2004/2005). You can simplify your financial life. FDIC Consumer News, 1-4.

Mead, N. S. (August 10, 2006). NEFE, CSREES continue to advance youth financial education. National Endowment for Financial Education.

Bodnar, Janet. (Summer 2006). Money management skills parents should teach their children. JumpStart Coalition for Personal Financial Literacy, 10(3), 11.

Tobe, E., & Heckman, P. (January 2005). Giving parents guidelines for teaching preschoolers about money. The Standard, Financial Counseling and Planning Education, 23(1), 3.

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