September 24, 2021

The following article is part of Consumer Council of Fiji’s (CCoF) Project Financial Resilient Fijians (Project FRF) which being implemented through partnership with United Nations Capital Development Fund’s (UNCDF) Pacific Insurance and Climate Adaptation Programme (PICAP). The project aims to help Fijian consumers become more financially resilient in the face of natural perils.

Financial Literacy is important, no matter what age group you belong to, whether you are just starting high school, funding your college education, planning for a family or retiring. Financial literacy will help you achieve your goals whether they are to own your own business, raise a family, or retiring early. Making thoughtful and informed decisions about your finances is more important than ever. In today’s fast-paced consumer society, financial literacy is an essential everyday life skill. It means being able to understand and negotiate the financial landscape, manage money and financial risks effectively and avoid financial pitfalls. For this reason, it is critical for consumers to understand and adopt skills such as financial planning, budgeting, savings and understanding insurance which would better prepare them not only to become resilient but will help them achieve their goals and dreams in life.

In this week’s edition, we will look at one of the basic steps consumers should take towards financial resilience – setting a shared family vision.

What is a Family Vision?

A family vision essentially answers the question, “What is the money for?” Or, put another way, “What is the purpose of our money?” This seems like an obvious question, but this is often not an obvious answer.

Case study 1

Think of a newlywed couple who—unknowingly—come into their marriage with two totally different visions of how to deal with money. The husband expects to have nice things: flashy cars, designer clothes, and a plush home. He expects that they will earn a lot, and spend a lot. The wife is more conscious about spending – she is focused on accumulation. She is not interested in financing a brand-new luxury vehicle; but would rather live in a studio flat and save as much as possible.

Implications: not having a shared family vision

Until the couple arrive at a shared family vision for their spending and overall finances, there will be conflict, frustration, and a sense that each spouse is undermining the other spouse’s goals. It is counter-productive at best when family members have different visions for the family finances, especially across generations. At worst, it can destroy a family’s financial stability—and even the family itself. The authors of ‘Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values’ note that the primary reason for an unsuccessful transition of wealth is due to the “breakdown of trust and communication within the family.” In other words, if a family wants to perpetuate its financial position – especially in their efforts to prepare for financial upheaval and/or to achieve their life’s goals, they need to get on the same page. There needs to be trust, and shared ownership of the vision.

Forming a Family Vision gives the family a game plan. It helps everyone to get on the same page and crystallizes the family’s core values. Having a plan like this in place is crucial for a family’s financial stability and achieving goals.

A Shared Vision Means Alignment

Whether it be a small business or large corporation, when everyone shares the same vision, momentum and efficiency can increase. The same is true for managing finances within a family. Do you want to ensure that your family is financially stable and able to respond to perils? Do you want to pass on your values to future generations? As an added bonus, would you like your kids to have more grit, have better mental health, perform better in school, and show greater ease in adjusting to unfamiliar contexts? Creating a family vision helps lead to all of these benefits.

A financial family vision means getting on the same basic page about money, but some families take it a step further, and outline a comprehensive mission statement for their family. No matter how far you take the process, research shows that when families rally around a common vision, their bond is strengthened across generations and children show more resilience through adolescence.

Tips for setting a family vision

Setting family vision is an important task which needs careful thought and discussion. As a rule of thumb, your family vision should follow the SMART criteria, having the following characteristics:

➢ Specific – What do you want to do? This should have a defined monetary value;

➢ Measurable – How will you track your progress?

➢ Achievable – How will you do it? You can break the goal into individual steps that are easier to complete;

➢ Realistic – Can be achieved using the resources you have?

➢ Timebound – It should have a specific timeframe or deadline.

Case Study 2

Example of a SMART family vision Makereta and her husband have a dream of sending their children to college. In order to save money for college, they decided to build a shed with racks to store their ginger produce. This would enable them to add more value by cleaning and drying their product. Cleaning and drying the product would also allow them to buy and store ginger from nearby farmers and wait for the best market price before selling it. They decide that they will need $5,000 to build their shed and want to have it ready before the next harvest in 10 months’ time. They plan together to buy $500 worth of building materials each month, starting now.

Having clear goals or vision/s for the future helps families develop plans which can make their goals a reality. Setting goals helps families focus on and think about the things they would like to achieve or things they would like to buy now and in the future. A family vision is the foundation for all the healthy financial behaviours and habits that bring families success for years to come.

Look out for an article by the Council in next Saturday’s editions on the second step families can take in order become financially resilient. For complaints or advisories Fijians can contact the Council via the toll-free number 155 or email complaints@consumersfiji.org. Alternatively, consumers can lodge complaints via the Consumer Council of Fiji Mobile App.