Family Finance Meeting

16 Mar 2025 | #money | #parenting

People with (good) financial advisors often have family meetings, where they discuss financial matters (income, spending, investments) with their immediate family (spouse, kids). This can be useful for people without financial advisors too, so we decided to start doing it. In this post I’ll describe why and how we are going about it.

Why

It starts with a few questions:

  • Growing up, did you know how much money your parents made? How much they saved? How did they invest (if at all)?
  • Right now, do you know how much your partner makes and how they save/invest?
  • Do you know how much you make after taxes and how much of that is spent and saved? Do you know how your investments did over the last year?

For me the answer to almost all of this was no (including about my own after-tax income). I knew I could look it up, but I just never did. Thus I decided to gather the information and then have a discussion about it with my family. For now, this is my wife, as our daughter is only 1 years old (although she was present), but I also aim to use these meetings as the kid(s) are growing up to keep them in-the-loop about our finances.

Gathering the data

So we need data. Luckily we have a spreadsheet where I record income and spending each month:

Income is easy (how much hits our bank accounts). Even if we forget in a month, it can be collected later.

For spending we have the follow categories:

  • rent - constant, so easy
  • house - we are building a house, so this will replace rent soon. Until then, we are already paying the mortgage for the land, and we have misc expenses (e.g. cutting the grass on the land), so those go into this
  • shared account - we have a Kyash account that both my wife and I have debit cards for, and we use this for everyday spending. Utilities are also charged to this, as well as smaller trips. Here I track how much money we put into the account each month.
  • nursery (and in the future, general education) - mostly constant, so easy
  • “pocket money” for my wife and I
    • I track my spendings, so I have the exact number of how much I spent
    • tracking expenses individually didn’t work for my wife, so she uses a dedicated bank account where we put a fixed amount monthly, and just record that amount
  • extra expenses - anything major that doesn’t fit into the above categories, e.g. international trips, electric bike, buying a car. They are essentially the same as the shared account, but kept separate to make them easier to review, as they are the big expenses. Also these are usually more or less discretionary, so they can be cut back if need be (while the shared account includes mainly daily essentials, food, utilities, which are harder to reduce)

New investments are also relatively easy: we both have automated monthly investments, and when we make any additional investment (e.g. after receiving bonus at work), we just add that to the spreadsheet manually (but again, this is easy to check later if we forgot something).

Existing investment growth can be obtained from our brokerages, however they usually compare total value of portfolio a year ago vs now, so we have to subtract the new investments to get the pure investment growth (or loss).

When

This is where there are various opinions from monthly, quarterly to yearly. For now, we started doing this financial review meetings once a year around new year. It is a good time to look back at a full calendar year, and it is also the time when we have more time both to collect the data, and also to discuss it. It is also the time to make plans and resolutions for the new year, to which this data is helpful.

How

For the first trial I made a presentation with the following sections:

  • Highlights - major events of the year for our family
  • Utilities - I have the data already collected, so we checked how much we spent on utilities over the year. Our new house will have solar panels, so I’m looking forward to seeing the drop year-on-year once we move in.
  • Net income
  • Spending per category
  • New saving and investing
  • Investment growth over the last year
  • Market moves of the last year - we invest in total-world funds, S&P500 funds, so the moves of those two, and the yen-dollar exchange rate changes
  • A bit of an outlook of the potential future value of our investments

For each of these, I also added the previous year’s value and a year-over-year change with explanation (e.g. income is up, due to promotion; extra expenses is up due to more expensive flights; nursery introduced as a new category).

What I learned is that while we are looking at values from a full year, it is more intuitive to see it per month. E.g. saying that we spent 1.5 million yen on pocket money (between the two of us) sounds a lot (almost the price of a small car), but if instead we say that 125,000 yen a month, that’s more like the actual number we experienced.

The last part was also interesting/important. Last year, 2024, was exceptional for both the US and the global stock market, while the yen kept getting weaker further adding to the returns expressed in yen. The S&P500 fund in yen went up 41% (while the total world fund was up 32%). This is highly unlikely to repeat itself over the coming years, so we looked back at the historical stock market returns and had a conversation about investing in general and how the market goes up and down. We also looked at the current value of our portfolios and potential future values if the market keeps going up or if the market crashes 35%. Seeing the actual yen values is much more meaningful than simply the percentages. And after a year of 30-40% returns, even the 35% drop feels just returning to the value a year ago, so it didn’t feel as bad. But if we take today’s value as the new basis, then even a 10% drop would feel like a lot.

In hindsight, especially after the market drops of the last week, this was a very good idea. To put things into perspective, the ｅＭＡＸＩＳ Ｓｌｉｍ 米国株式（Ｓ＆Ｐ５００） fund went from 24,281 yen to 34,182 yen during the course of 2024 (+41%), and at the time of writing it is back at 29,711 yen. So after a 41% increase in 2024, now it is down 13% year-to-date. Discussing the possibility of a 35% drop and seeing the value of our holdings in that case helped us prepare for this, and reduce the stress now.

I originally wanted to do this to prepare my wife, as I am interested in investing, has been looking into this a lot (mainly listening to the RR podcast), and I felt that I was prepared. However after going through the exercise and seeing both historical returns year-over-year, as well as the potential loss if the market drops helped me internalize it more, and significantly reduced the worry now after an actual market drop.

So that’s how I run our first family finance meeting, and how we plan to do it going forward. Let me know in the comments if you do similar, organized discussions about money and how you go about them.

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