How to Solve 6 Tricky Family Money Problems
More Money Questions
My husband grew up poor and has always been insecure about money. We're not wealthy but we make decent salaries, put money aside for retirement and our kids' educations, and stick to a budget. But he still gets freaked out whenever I buy something that's not a necessity. How can I get him to calm down?
"Our childhoods definitely color the way we relate to money as adults," says Alexa von Tobel, CEO of the personal finance website LearnVest. You won't be able to completely change your husband's attitude, but you can structure your finances so that spending is less stressful. Von Tobel suggests that the two of you discuss your goals for the coming year. Set up a separate account for big expenses -- a bathroom renovation, a new TV, a tropical vacation -- and have a percentage of your paychecks deposited there each month. With the negotiation done up front and the money transferred automatically, you won't have to debate every time you want to pull the trigger on a big expense.
For day-to-day expenditures (clothes, groceries, lattes), Howard recommends the system he and his wife use: "We have a 'don't ask, don't tell' policy. Unless one of us wants to buy something above a certain amount -- you can set any threshold you want -- we don't discuss it." Otherwise, you could find yourself in a situation where your husband questions every swipe of the debit card.
Another solution that many couples swear by is his-and-her accounts along with a joint one for paying the mortgage, utilities, and other shared expenses. If the situation doesn't improve, consider meeting with a financial adviser, who can evaluate your finances and confirm that you're on the right track. As Ramsey notes, "Sometimes it takes a neutral party walking you through the math to make a fearful person feel okay."
My elderly mother is showing signs of senility, and my sister, who has a financial background, wants to take over our mom's finances. This makes sense from a competency point of view, but, sadly, I don't entirely trust my sister not to skim off some of Mom's money for herself. How do I set this up so I can relax?
Your accusation might be pretty explosive if you confronted your sister with it -- so don't. Instead, tell her you want to be a joint holder with her on all of your mom's accounts, advises Godfrey. The reason? "I feel like I need to be in the loop about Mom's finances, too." Divvy up responsibilities, offering your sister investment management while you handle bill paying. Even if she insists on doing both, this strategy means that you can review statements and make sure nothing is amiss. Do all of the banking online to monitor debits and view cleared checks. And agree that you'll consult each other before shelling out money for large purchases. Howard even recommends asking the bank to set up an account that requires any check over $250 to be signed by both of you.
If your sister pushes back, consider enlisting a bookkeeper to manage your mom's day-to-day expenditures. These professionals usually work in the offices of certified public accountants and charge between $15 and $25 per hour. A financial adviser can oversee her investments. (Fees vary; find a local adviser through the Financial Planning Association at fpanet.org.) Say to your sister, "I feel strongly about being involved, but I don't want this issue to drive a wedge between us. So let's bring in outside help."
My parents have virtually no retirement savings, so my three siblings and I need to pitch in every month. We all earn wildly different salaries, with one brother making around $30,000 a year and another making well into the mid-six figures. What is the most equitable way for the four of us to share the burden?
It's perfectly fair for everyone to pay the same amount. "Just because one brother has done well doesn't mean he should be subject to a 'success tax,'" says Howard. But an arrangement whereby each of you pays the same percentage of your yearly income (so the wealthier family members fork over more) could also work. Those who contribute less could compensate with sweat equity -- by taking Mom and Dad grocery shopping, say, or cleaning their house. The trick is to present these ideas as options, not demands, and see what everyone's comfortable with. "As a larger income earner, I might volunteer to give more," says Ramsey. "But if you tell me I have to give more, I might resist."
Can't agree? Howard suggests a compromise he calls "the big state, small state solution" (as in Congress, where every state gets two senators but the number of representatives is determined by population). Figure out the total amount your parents need per year and divide it in half. Split one of those halves equally among siblings; with the other half, have each sibling pay a percentage of total income, as described above. This insures that the modest earners don't get squeezed and your affluent brother won't feel he's bankrolling the whole endeavor.