How to Separate Family Time From Your Finances

Discussing financial issues during family time can be counterproductive.

The new year is a great time for parents to reevaluate their college saving strategies, but staying on track is the key to 529 plan growth.

To reduce stress and relationship tension, set aside a specific time for money discussions.

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Mixing money talk and family bonding is a recipe for frustration.

Understanding the underlying dynamics can defuse tension and provide insights that help you release old money habits and get in sync with your partner. Agreeing on joint priorities, not on each other’s spending habits, is the key to alignment, says Kristin Harad, a certified financial planner in San Francisco who specializes in coaching new parents. “It’s about getting agreement and about what you can do within the framework you agree on,” she says.

But first, here’s evidence that may validate your experience that arguing about the grocery budget doesn’t make for a pleasant family dinner.

Researchers at the University of British Columbia found that trying to multitask conversations and decisions about money and parenting created an emotional clash, especially for mothers. The study asked 186 parents in British Columbia who had at least one child 18 years old or younger living at home to take a survey rating their sense of meaning and fulfillment in a series of episodes. Multitasking other topics with parenting didn’t create angst, but money talk made the parents feel that what they were doing was "less meaningful,” according to researcher Kostadin Kushlev.

Denise Hughes, a money coach in San Carlos, Calif., and author of “Earn, Save, Spend, Give,” says the researchers’ findings underscore the value of paying attention to one important topic at a time, which means having financial discussions in a purposeful way. That means there shouldn't be any interruptions or mixed agendas.

[See: 13 Money Tips for Married Couples.]

“If I’m on vacation with my husband and that is the purpose, it’s a focused, intentional time of reflection, fun and leisure. Then why would we be bringing in a conversation about a new job or how to work through this money problem or an area of conversation that is identified as stress?” she asks. 

That’s especially true for women who want undiluted time for relationships, the researchers found. Financial concerns are at cultural odds with many women’s perceived roles as nurturers. “When a woman is spending time with her family, she doesn’t want money, or anything else, to take away from that relational connection,” Hughes says. “Money needs a special time in relationships, just like vacations and careers. If you make time for money discussions, it doesn’t need to have that stress and tension around it."

Money discussions especially rattle new parents, Harad says, because they don’t always realize that the introduction of a baby forces one big either-or decision about resources. They will either spend more money on child care or they will forfeit earnings when one partner stays home with the child. “Right out of the gate, you need to accept that truth and get OK with it,” she says.

Layer on top of that the long list of parental "should’s" that inevitably accompany parenthood, such as life insurance, estate planning, college saving and the cost of medical care, and it’s easy to see how seemingly routine conversations about money can turn cuddling into crying.

Harad recommends that couples get a grip by focusing on both the very short term and the very long term. First, it’s imperative to have a short-term emergency fund sufficient to cover two, and preferably three, months of living expenses. That gives you a financial cushion that provides comfort for one great parental fear: You won’t have enough money for an emergency.

[Read: In Financial Planning, Couples Should Work Together.]

If possible, also build up a cash reserve for the unexpected, such as a run of doctor’s visits requiring pricey tests and copays or a trip to introduce the baby to ailing grandparents.

Then, turn your attention to the longest-term goal: retirement. Making progress – any progress – toward that goal will also be a relief, Harad says, because you’re actually working in the best interest of your future adult children by ensuring your own financial independence.

With those goals accomplished, it’s time to turn your attention to daily financial frictions that set up conflicts that deflate your enjoyment of parenthood. Typically, Harad says, that means ensuring each partner has a personal spending allotment that is judgment-free. Small splurges, such as a new toy for the baby or last-minute tickets to a movie, preserve some financial autonomy.

And, when you create a "life changes" account, you also create a shared vision for a bigger home, bigger car and college tuition. This makes it possible for one partner to make a career shift, for example, or the account can cover expenses while a partner starts a business venture.

If all of this feels overwhelming, especially with a young family, set aside a couple of hours a week or half a day per month to focus on one decision at a time, recommends Melinda Davis, a wealth manager with Northstar Financial Planning, Inc. and mother of two school-aged children.

[Read: 5 Ways to Fund Your Passions.]

“Getting organized helps you feel less frantic about it,” she says. Designating a specific time to discuss, say, disability insurance or to assemble key information about all accounts in a single file means you don’t have to think about it the rest of the time.

“It isn’t money and parenting that don’t mix. The underpinning is the skill set around how to problem-solve and make certain life areas work through healthy communication so that money and parenting do mix,” Hughes says. “If you’re congruent with spending money on your deepest values, that brings the deepest satisfaction with money.”