10 Reasons to Pool Your Family Money
When you pool your family money, you instantly become economically powerful. The reason is because you give your family choices.
About 6 years ago my family decided to pool our family money. We decided that our money, and our resources, separately, were not nearly as powerful as they would be together.
We figured out that group economics is probably best for our group progress.
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So, we did it. The “we” included my mother and 4 of my 5 siblings (including our spouses, for those who were married).
We made a conscious decision to embark on the journey of putting a portion of our money together each month.
We took a poll, came to some basic agreements, set set up our monthly meetings, created a set of bylaws, created roles and responsibilities, and established our mission, our purposes for our pooling our money, and went for it.
It’s been both fascinating and incredibly interesting, but it’s been rewarding. In this article I’m not going to go through all of the specifics of “how” we did it. Instead, I want to talk about the “why” we did it. The how is going to depend on a lot of variables, but it should start with the why.
Once you nail down the reason(s) why, the how will take care of itself.
If you want more details about how we did it, what did our bylaws look like, and some of the specifics, please feel free to contact me
Here are 10 reasons to pool your family money
1. Group Economics
This simple concept is crucial, and the inability for some people to do this is one of the reasons we sometimes struggle and have a hard time effectively gaining financial traction. If you want to be effective and competitive you have to learn to work together and understand the possibilities associated with collective savings and group economics.
There is a tremendous amount of power in a circulating dollar that goes from hand to hand and never leaves your family.
Sometimes when we gather at our family meetings and we actually collect cash, it’s surreal to watch money go from hand to hand and never leave the circle. It does something to the psyche.
Money is called “currency” for a reason. It’s supposed to move and flow, and pooled together so that it can work more efficiently. The stock market, banks, mutual funds, index funds, etc., all work off the concept of pooled money.
2. Build a Capital Base
A capital base is a base level of funding. Having one in your family that you can draw from, when, or if needed, is powerful. This is what you can draw from when you want to build more, invest more, or give more.
What you do with the capital base is up to your family. This capital base is liberating because it gives your family the freedom to choose.
When you pool your money, you are increasing the power of your money triple fold, and multiplying the possibilities of what you can ultimately accomplish as a group.
You increase your investments, your buying power, your acquisition ability, and your control over real capital.
3. In Case of a Family Emergency
Stuff happens. We may not like it and it may not feel good, but the fact is, things go wrong. When you pool your money, you build the ability for your family to mitigate risks and cover family emergencies with your pooled money.
When things go wrong, you don’t have to get a GoFundMe account, ask people for money, or wonder how you are going to bury a loved one.
Your family has money that can be called upon if, and when, needed. This can bring dignity, group self-esteem, peace of mind, and pride to your family.
4. Fun Money
Everything doesn’t have to be business all of the time. I often have to remind myself of this one.
As Covid restrictions begin to ease partially, perhaps your family wants to take a family vacation, go to a live sporting event together, a picnic, have a potluck, or anything. Now you have the money!
The money is there, available, and ready to be used for fun, if you all decide that’s what you want to do with it. And that is the key, your family gets to decide because you have the money to decide.
5. Spend Time With Your Family
Maybe not the number one goal of a lot of people, but it definitely allows you to stay in touch, in tune, and regularly communicate with your family members that you may not otherwise see very often.
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We hold our meetings monthly, and either in person or via Zoom. But you could hold your meetings bi-monthly, once a week, or however often you all decide.
Whatever you decide, it gives you an opportunity to stay in communication with your family, and for some people reading this, this one reason alone, can make it worth it to pool your family money.
6. Build Financial Discipline
For some people in your family, this may be the first opportunity they’ve had to build stability and a sense of organization into their personal financial life. You may be excellent with your money, however, having discipline with money is not an easy thing for some people.
If you have a family member that has had trouble managing money, this could be a game changer for them.
Perhaps this is their opportunity to change their paradigm about money. This opportunity to pool your family money could be the catalyst of a new beginning for one of your loved ones.
7. Ability to Help Others
If your family has ever has some philanthropic aspirations, this is an excellent chance to fulfill that itch. We use our pool of money for things like bereavement money for extended family, graduation gifting, life event donations, and other things that go to help people in our own extended family.
Perhaps you have an aging parent, or elderly family member, who needs a little bit of help with money, food, or repairs to their home from time to time. This fund can do that!
Having a pool of money available to pull from can be a tremendous blessing to that elderly family member.
8. Legacy of Cooperation
Nothing can replace the “good” that comes from unity, being on one accord, and coming together around a common purpose. Creating this type of legacy can speak volumes to your family for generations to come.
It says “we can and did work together”. In other words, it leaves a family legacy of building something constructive, something useful, and something that can be carried on.
You may be from a family that was never left a legacy of anything. There is nothing you can do about that. But you can create a family legacy and leave something for the generations in your family to come. Just because no one left you anything doesn’t excuse you from leaving something for those that come after you.
9. Developing Accountability
Everyone in your family is not at the same level when it comes to saving money, or when it comes to the discipline it takes to prepare for their financial future, As I mentioned before, saving money is just not that easy for everyone.
Having a group of people around you who love you, and at the same time hold you accountable, can be very important for some members of your family.
When people around you are working towards a collective goal, focused on saving money, and have time and energy invested in a family pool, the accountability can encourage someone in your family to grow in this area.
10. Opportunity to Educate
It’s not often that you have your family together as a captured audience. This is a great opportunity to share knowledge on topics, introduce concepts and ideas, and pass along valuable information to one another.
Having discussions and presentations on things like life insurance, individual stocks, index funds and mutual funds, ETFs, and wills and estate planning, can be a game changer for a family.
Perhaps there are people in your family who already have a grasp on these topics and can teach them to the group at meetings.
We use bylaws, meet once a month, run the meetings using a modified family-friendly version of “Robert’s Rules”, and focus on business, but try to leave time for regular non-business conversation before, during, and after meetings.
When we pooled our money 6 years ago we had no specific end goal. We sort of built things as we went along. The one thing we did realize, was the importance of being able to turn to ourselves when we needed, or wanted, money.
We understood that It’s important to take responsibility and accountability for our own needs, through our own deeds. We didn’t count on the government, charity, aid, or other people to create what we wanted. We knew that there would never be a need to worry about borrowing money again.
Click here to read my thoughts on borrowing money.
If you have any questions, or want more information about what we did and how you can pool your family money, please feel free to reach out and ask me. I’d love to help you and your family.
ABOUT THE AUTHOR
Eric is the founder of Smart Money Bro, a blog about empowering people and discussing practical ways ordinary people can be extraordinary with their money. He only writes about things that he has done, and that actually work. He’s made mistakes and has turned his financial future around, and is now in the position to help others do what he’s done. Read More
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