Learning Resources

How to Solve Financial Problems in the Family

28 Apr 2022

How to solve financial problems in the family | Pauline Teo | VI

When I was young, the older generation would always tell me that the best way to have financial stability is by having a government job – and maybe it is, as what we Singaporeans call "having an iron rice bowl".

And they were right.

But what they didn't teach me is how to handle the ever-rising costs and how to grow my money (because they were also never taught that), which led me to lose 40% of my investment in unit trust in 2009.

I was suddenly faced with the question of how to solve financial problems in the family.

On New Year’s Day of 2010, I sat down to reflect on our financial situation… all the "what ifs" running through my mind.

Determined to fix the situation for my family's future, I set a financial goal.

See also: Financial Planning for Parents in 5 Uncomplicated Steps

I gathered my kids, spoke to them about the situation, and let them know that we would be cutting down on major unnecessary expenses for at least five years so that Daddy and Mummy could save up more money.

I also painted a picture of what life would be like when we were financially free, and thankfully, they were understanding.

And that's eventually how we handled our financial problems together with the family's support.

Financial problems within families are inevitable and are always tough to handle. But at the end of the day, it is how your family moves forward from these problems that matter.

If you are someone who's still wondering how to solve financial problems in your family, here are 4 principles I've stood by over the years.

1. Don't point fingers

How to solve financial problems in the family | Pauline Teo | VI

When something goes wrong, the urge to go witch-hunting, find out who's at fault, and point fingers can be a strong one.

We're always hearing stories of families getting into big arguments or even fights because of money. But rarely do we hear these same people have a proper resolution to their problems.

More often than not, family members refuse to discuss or address their financial problems. They would prefer to dismiss it or let it simmer until it comes up again in the next argument.

This should not be the way, because not only will it harm your relationships, but your family's well-being will also be threatened.

2. Analyse the damage and ACT

How to solve financial problems in the family | Pauline Teo | VI

What's done is already done. If you have a financial problem, you have a financial problem. There's no point in pretending it doesn't exist.

So instead of avoiding it, the first step to resolution is to tackle it head-on. What's the damage like? How bad is it? How long will you need to get it fixed? Only by understanding the degree of the damage can you know how much you need to repair.

If it's just a matter of the family not having any savings for the future, all you need to do is start saving.

But if you are like me, having lost a big chunk of money in a blink of an eye and you need to quickly make it back, you'll need a bigger plan.

Look through your monthly expenses and see what are the unnecessary ones you can cut out immediately.

3. Don't start saving only when you need something

How to solve financial problems in the family | Pauline Teo | VI

For a lot of people, they're often just living paycheck to paycheck and are only willing to save when a financial need comes up.

Let's say they plan to have a holiday in a few months' time. Then they will start saving for the holiday and by the time they're back home from it, their bank account would be near zero again.

It may not feel like it now but this is extremely risky. You can plan for a holiday and save up for it, but accidents are unplanned. That's why we often see when accidents happen, families would start panicking and financial problems would arise.

Hence, set a financial goal for your family and stick to it. Build up your wealth and have savings at the ready, always. Set a long term financial goal and work your way there.

Instead of short-term goals like "I need to have $3,000 in 5 months because my holiday is in April", go for long term big goals like "I need to be earning $100,000 in annual passive income by 2028".

4. Find legit and sustainable ways to grow your money

How to solve financial problems in the family | Pauline Teo | VI

When talking about growing their money, most people's ‘big plans’, especially in Singapore, usually involve the lottery. Those who do invest in the stock market would talk about looking for cheap penny stocks to buy and hoping the share prices would go up.

I can tell you now that neither is a good plan and "hope" is not a strategy. Why leave it up to fate when you can take control of the situation into your own hands?

Instead of gambling your money away, use the money to pick up REAL wealth-building knowledge, because with this, you will have much higher chances of earning money compared to the lottery.

Attend an investment course, put in the effort to execute the things taught and mix with others in the class who are reaching for the same financial goals. Never underestimate the power of community.

Doing this can not only solve financial problems in the family, but it can also even prevent most financial problems from arising if you start early.

Personally, picking up value investing saved my family from the 40% investment loss more than a decade ago. Following proven methods by the greatest investors of our time, such as Warren Buffett, Charlie Munger, and Sir John Templeton, I did not only make back the amount I've lost back then but much more.

But different people are suited for different investment methods, so find one that's most suitable for you so your family will have fewer financial problems to solve moving forward.

If you want to know more about the value investing strategy that saved me and my family from financial problems, come to my free two-hour webinar. Just click this link.

I’ll see you, yeah?

~ Pauline Teo

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