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Families are businesses today

Posted: Thursday, June 07, 2001

NEW YORK (AP) -- Sometimes the future seems way off for American families, too far into all those tomorrows to get terribly worried about, too distant to make seriously detailed plans.

Plans, for example, on how they intend to live in retirement. Amidst an avalanche of admonitions and warnings to prepare financially, a respected survey shows that fewer Americans are saving for retirement.

It's a bit of a mystery.

To some extent it might be understandable, since the past is filled with examples of issues and concerns that took care of themselves because of a creative, expanding economy that raised living standards.

And if the concerns didn't take care of themselves, then there was rich old Uncle Sam with dollars in his pockets for health care, education, housing and retirement, not to mention goodies for lesser issues.

Now, however, Uncle Sam is beginning to feel the pinch, and so are taxpayers, not to mention employers and charitable organizations, and all warn in one way or another that families must become more self-reliant.

The effect of the warnings aren't encouraging. The Employee Benefit Research Institute, among others, finds the percentage of families saving for retirment is shrinking, not rising as had been anticipated.

It could be temporary, a consequence of stock market shock and the threat of layoffs that makes immediate financial needs more important than saving for the future. But maybe not.

The latter possibility arises from the same survey's findings that fewer than two in five respondents said they had even attempted to assess their financial needs in retirement, compared to 51 percent a year ago.

This, despite warnings that Social Security is threatened, that medical costs might continue to rise, that businesses are seeking to cut back on health care and that, in effect, they must stand alone.

There is a sense in such reports that families are overwhelmed, untrained in dealing with complex matters and so unable to cope. That the problem lies in the basic lack of education in family management.

It's a situation about which Purdue University economist Mary Holtman has some pertinent ideas that can be transferred from the world of business.

''It is ironic,'' she says, ''that no responsible fledgling business would proceeed without a written business plan.'' But families do, and it leaves them unprepared to face issues that inevitably must be faced.

Issues that are complex, intricate, often legal. In recent decades a family without a file cabinet is a family unprepared to deal with life. Documents must be saved and ready for the tax collector, the credit agency, the insurer and government agencies. Plans must be made.

Familes must understand systematic management, she says. ''In the last 30 years the systems have become more complex, so they demand more management.'' And management assumes planning, and planning assume training.

Solving one problem prepares you to solve the next, she says, just as in business. ''You need the same skills to run a family as you do to be successful in a small business,'' she concludes.

That means anticipating and planning, a skill in which few families have adequate training. It can leave them unable to deal with issues, even those issues vital to their own well-being and future.

Whereas successful businesses have a written business plan, ''families are ad hoc, informal and taken for granted,'' economist Holtman says. And in these confusing, complex days you can't take anything for granted.

End advance for release Sunday, June 3.



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