When was the last time you talked to a family member about money? If we’re honest with ourselves, the answer might be never. Money is truly one of the last forbidden topics in the world. Reuters even went so far as to call money, “The Last Taboo.”Discussing our finances with our parents or, in some cases, our children, can be incredibly uncomfortable. But working on our finances alone, especially when we want our financial growth to positively impact the family members around us, can often be counterproductive. Having these meaningful conversations with parents, children, or close family members and friends, is important for a variety of reasons.
Why Should We Talk To Our Family About Money?
44% of Americans have named personal finances as the toughest thing to discuss. But having these financial conversations can have an incredible, positive impact both on our own financial lives and on our relationships with family members. If we aren’t open and honest with one another about our current financial state, and our future financial goals, we’re less likely to achieve them. More importantly, if we fail to loop our family in on our plans, they may not fully understand the actions we’re taking.
All of that being said, talking to our families about money may still sound like a painfully awkward way to spend a Sunday afternoon. So, how do we go about initiating these conversations? And what purpose should they serve?
Talking to Your Spouse
This may be a given, but it’s surprising how many people don’t talk to their spouse or partner about money. Whether you have separate or combined finances, it’s still important to discuss:
Large savings goals (like buying a home, or funding your children’s college education)
Talking to Your Kids
Although they might not realize it, your kids are being directly impacted by every financial decision you make. Looping them in on family budget conversations, or helping them to understand your long-term financial goals can help them learn early on the value of a financial strategy. They’re also more likely to participate in family activities that support your savings goals if they know your reasoning behind them.
For example, if you and your partner have decided to cut back and budget in order to better save for your child’s future college education costs but don’t tell them, your young child may be confused by the sudden feeling of lack that comes with “cutting back.” However, if you sit down to discuss your family budget, and why it’s important to cut out small expenses now to save more for them later, they’ll be more likely to understand.
That’s not to say every conversation will go perfectly, or that there won’t occasionally be misunderstandings when you choose not to purchase the latest-and-greatest toy. In spite of these setbacks, it’s worth spending the time to teach your children about money, and how to use it responsibly, from an early age.
Talking to Your Parents
Conversations with your parents may be even more uncomfortable than conversations with your spouse or your kids. It feels awkward to discuss finances with your parents, and possibly even disrespectful. However, there are a few things that every adult child needs to review with their parents at some point, if only to ensure everyone’s on the same page. Here are a few questions that are worth asking them:
Do you have a will in place?
Who is the executor of the will?
Do you have a financial planner or someone else coordinating your estate plan?
Do you have a medical directive?
Is there a lawyer handling your estate planning?
Facilitating These Conversations
Still feeling uncomfortable having these conversations with family? A financial planner can help. By acting as an impartial third party, a financial planner can help you to outline what these conversations should look like, what questions you should ask, and what outcomes you should look for. Have questions? Contact us today!