Family Finances 101: 3 Reasons Why You Should Be Holding An Annual Family Meeting
18 Feb 2022
Talking about money with anyone can be uncomfortable, but this can be especially true when it comes to discussing finances with your kids. Many parents and guardians think their kids are too young to talk about money, but that’s a myth! Whether you believe they lack an understanding of “adult life” or you are embarrassed about your family’s financial situation, it’s still important to have conversations about money with your children. In my experience, kids can understand money conversations at any age if you engage at their level. I’ve had budgeting lessons with kids in grades two and three, and I was shocked not only at their general understanding but at the great ideas they had to save money.
If you aren’t sure how to approach these conversations with your kids, there are a lot of resources online that show you how to simplify concepts like budgeting, purchasing, and borrowing money while keeping kids engaged and entertained. A great place to start is by having an Annual Family Meeting to discuss any plans for large financial purchases like a vacation, pet, or new gaming system. And what better day to have a family meeting than on Family Day itself?
While we know not every province has dubbed the February 21st holiday Family Day (i.e. Heritage Day in Nova Scotia, Islander Day in PEI, and Louis Riel Day in Manitoba), it’s still a great time to take advantage of the day off to focus on your family and create a plan for the rest of 2022.
What is an Annual Family Meeting?
If you’ve ever bought stock or worked for a corporation, you may have heard the term AGM or Annual General Meeting. Both private and public companies are required to hold AGMs with their shareholders to discuss the organization’s goals, strategy, and financial statements for the year. An Annual Family Meeting or an AFM is the exact same concept but instead of inviting your shareholders, you invite your family or household members – including your kids! During the meeting, you will discuss any and all big plans, purchases or activities that your family wishes to do over the upcoming year.
How do I hold an Annual Family Meeting?
What your Annual Family Meeting looks like will depend entirely on what works best for your family. You could hold it over a family meal or while eating your favourite snacks. You could dress up in your best business attire and pretend the dining room table is a boardroom or hold the meeting on the couch in your pyjamas. The opportunities are endless, but the general agenda will revolve around discussing the following questions about any upcoming family vacations, extracurricular activities or large purchases.
- Are we having a family vacation this year or are we saving for a larger vacation in the future?
- Where do we want to go?
- What activities would we like to do while we are away?
- How much are we going to budget for trip expenses?
- What compromises or cost saving activities will be done throughout the year to contribute to the vacation fund?
- What extracurricular activities would each family member like do this year (i.e. karate, hockey, dance, piano lessons, summer camp, scouts)?
- How much will each of these activities cost? Include an estimate of all fees, equipment, and travel costs.
- How much does the family have budgeted for extracurriculars this year?
- Given the list of activities, is it possible to do all the requested extracurriculars or does each family member need to choose only one or two?
- What compromises or cost saving activities will be done throughout the year to contribute to extracurricular expenses?
Other Major Family Purchases:
- Do we need to make any major purchases (i.e. a new family computer or new winter coats), and do we want to make any major purchases (i.e. a video gaming system, a trampoline, or a family pet)?
- Are there any alternatives to making this purchase?
- How might these expenses impact your plans for things like vacations and extracurricular activities?
- What compromises or cost saving activities will be done throughout the year to contribute to these additional purchases?
Why is it important to have a family meeting?
There are many reasons why it’s important to hold an annual or twice-annual family meeting, but I recommend them because:
1. No one can afford to do everything. While it is important to talk about your family’s hopes for the year, it is also important to set realistic expectations early on. If your children understand why you are making the choices that you are, they will be less likely to later pressure you into deviating from your budget and plan.
2. You can set realistic expectations. If you are planning a family vacation or need to make a major purchase, you won’t have as much money to do other things. Meaning, you probably can’t afford to spend extra on things like birthday presents, grading presents, etc. It’s important to set these expectations with your kids, and let them learn the reasoning behind these expectations.
3. Communication is always a good idea. By involving your family in these important discussions, they will know that you trust them and value their input. As a result, they will likely be more open to discussing other topics with you in the future and be more respectful of your decisions. Communicating household finances as a family also provides other benefits to your kids like improving their financial literacy, math skills, and confidence when making large decisions.
Whether you take the holiday to hold an AFM or not, try to make teaching your kids about money management a priority. Having these conversations frequently and early will not only help your kids understand the “why” behind family decisions but will teach them valuable life lessons about money management, planning, and creating financial goals– setting them up for financial success!