Money can be a taboo topic and uncomfortable for some to talk about. Some fear talking about wealth with their kids may shift their ambitions or values. And talking about money with your parents may be disrespectful or worse, cause them to question your intentions. However, opening the money discussion with family members is becoming more important with the rise of a “sandwich generation,” where people are assisting both their adult children and parents.
Why Have the Conversation?
You can help your children develop a healthy relationship with money. You can foster this by sharing what wealth means to you, its history, why you work hard, and how it shapes your family’s future. For your parents, it can help relieve their financial stress and build peace of mind before a crisis event occurs. Your conversations might focus on their retirement plans, long-term care and wishes for transferring wealth.
Eight Money Conversations You Should Have
- Long-term financial goals – New families might be focused on merging finances, saving for a home or general spending habits. Mature families could be focused on where they’re going to live in retirement.
- Spending decisions – Raising financially savvy children in a material world can be challenging. You can teach them that money has value – it’s gone once you spend it – just as you teach them good manners. And helping them overcome the apparent “magic” of credit cards by being a good example – not going overboard yourself or giving in to their request for the latest and greatest
- Insurance – Your ability to earn income is one of your major assets and at the same time, your insurance benefits at work may be overlooked. Life and disability insurance provide a safety net. According to Social Security, an estimated one in four 20-year-olds will become disabled before reaching full retirement age
- Marching through tough times – A job loss may be a temporary setback. Instead of announcing the cancelation of Christmas, be upfront with your family. You may be surprised by their support and creativity in cost-cutting measures
- Future of the family business – These are the cornerstone of the global economy, generating an estimated 70% or more of GDP and over half of all jobs. Discuss all sides of the business with your kids so they can rise to become leaders. Encourage them to develop outside skills and expertise. Teach them your values and instill meritocracy.
- Long-term care costs – Parents may believe it’ll never happen to them and the kids may assume their folks have got this need covered. But just in case, who will help take care of you and how will those costs be funded
- Naming trustees and powers of attorney – Some avoid these discussions fearing that they are related to mortality. But what if you are incapacitated? Shouldn’t your loved ones know and be prepared that they’ve been designated
- End-of-life wishes – Your loved ones need your help and guidance. Very few of them majored in mind reading. What are your wishes regarding medical care, distribution of wealth and treasured personal belongs, and charitable giving? And remember that fair doesn’t always mean equal.
Three simple “rules” when approaching these conversations:
- Get on the same page with your spouse
- Start the conversations early
- Set the right tone – Speak with them, not to them. Recognize the value your parents place in maintaining their independence, dignity and never being a burden.
Talking about this seemingly taboo topic can be uncomfortable, but valuable to you and your family. May you secure your future wisely and always have sage advice.