Topic Guide
What Is Family finance?
Family finance is a subject covered in depth across 6 podcast episodes in our database. Below you'll find key concepts, expert insights, and the top episodes to listen to — all distilled from hours of conversation by leading experts.
Key Concepts in Family finance
Share don't scare
A principle advocated by Rachel Cruz, this framework advises parents to be transparent with their children about family finances and budget adjustments without causing undue anxiety or fear. It suggests communicating changes in a calm, factual, and reassuring manner.
529 plan
A tax-advantaged savings plan designed to encourage saving for future education costs. In this episode, a caller's parents set one up for her, but later demanded she repay the entire balance, including its growth, to them.
Promissory note
A legal instrument in which one party (the maker or issuer) promises in writing to pay a determinate sum of money to the other (the payee) at a fixed or determinable future time. Here, the caller's lawyer father made her sign one at 18, obligating her to repay her education costs.
Compound growth
The process of earning returns on both the initial investment and the accumulated interest from previous periods. Dave Ramsey highlights that the parents' demand for $114,000 included the full compounded growth of the 529 plan, for which they incurred no additional cost, making their request unreasonable.
Parent plus loan
A federal student loan program that allows parents to borrow money to help pay for their child's undergraduate education. This episode highlights how these loans can become a significant financial burden on parents, even into their retirement years, especially if the student cannot contribute to repayment, creating a challenging ethical and financial dilemma for the parent.
Intense debt repayment focus
This concept, implied by Dave Ramsey's advice, involves temporarily halting other financial goals (like retirement investing) to direct all available resources and income towards rapidly eliminating a specific debt. The episode illustrates this as a strategy to gain traction when trying to balance multiple financial objectives results in slow progress on all fronts.
What Experts Say About Family finance
- 1.Rachel Cruz's principle "share don't scare" guides parental communication about financial cutbacks to children.
- 2.Parents should explain financial changes as making "good decisions with our money" rather than dire warnings about consequences.
- 3.Acknowledge past financial missteps by framing current actions as "undoing them" and managing money "more carefully."
- 4.When explaining budget cuts to young children, keep the message simple and brief, as "less is more."
- 5.Children "move on very quickly" from conversations, so avoid lengthy explanations or "seven minute diatribes."
- 6.Reassure children that despite changes, "we're okay. It's just a change."