Do You Talk to Your Parents About Money?
Numerous financial sites and articles recommend that you get a grip on your parent’s financial situation. After all, they could get sick and expect you to handle finances for them, run out of money and expect you to support them, or worse yet, they could die and leave you with a mess. Not one of those sites seem to realize that it should be a two way street.
If you expect your parents to open up to you about their financial situation, you should expect to be open with them about yours. Parents need to understand their adult child’s management of and relationship to money so they can be confident that the child is competent enough to be handle Mom and Dad’s affairs if need be. Adult children need to understand their parents financial situation in case they need to provide care in the future.
Parents of adult children are reluctant to open up to the kids for a variety of reasons and vice versa, but in order to build wealth across generations, both generations need to talk money.
Why Talk Money?
Families hoping to build wealth across generations who learn to talk money together can:
- identify common goals and values related to money and investing
- learn about each others’ wishes on money, health, and end of life concerns
- support each other in efforts to prepare and maintain estate planning documents
- identify and deal with impacts that money (or lack thereof) has on each generation
- provide safe haven storage for each others list of financial accounts
- target money to carry forward family traditions and legacies and
- help each other prepare for next life stages – when parents or grandparents may need assistance.
Why Resist Talking Money?
Families might resist talking about money due to:
- trust issues (members might steal it, make info public, parents might lecture or try to control)
- independence desires (parents fear kids might try to get control their lives, kids might fear parental disapproval of their money management skills)
- differing money goals (kids think parents need to be in higher return investments, parents think kids are gambling with the money)
- embarrassment (all parties may not ‘walk the talk’ on money management)
- cultural issues (money has traditionally been a private topic, not discussed between family members) or
- jealousy (siblings might envy other siblings if financial situations are known).
What Money Talks to Have?
Suggestions on what to include in your various conversations about money include:
- the role of insurances and who has what
- comfort level with the amount, number and longevity of income sources (not exactly how much there is)
- anticipated future financial needs (or desires) from family members
- reviews of each others’ estate planning documents, powers of attorney and etc
- special concerns from any family member
- organization and location of financial papers and accounts and
- names of financial advisors, accountants, lawyers and other important advisors
How and when to Start Money Talks?
When is now. You just never know what fate will bring – remember 9/11.
As to how, that is highly specific to your family, but there is a lot of advice out there. Huffington Post, for example has a collection of articles about it. Books, like The M Word, have also been written about it.
You could start with a family meeting to discuss why the family should be having money talks. Here is a checklist for you to use to organize that meeting.
My Family’s Money Talks
My parents were of the ‘Greatest Generation’. They didn’t get specific about money, but they did open up more than other members of their generation. They gave me a general indication of the level of wealth they had and let me know that it was in a trust to avoid probate. However, when they died, I was quite unprepared to deal with their estate. As a result, I am trying to initiate family money talks with my descendants so that we can all be better prepared.
Do you talk with your family about your financial situation? Do they share theirs? How would you go about getting your family involved in money talks, or would you even want to do so?