Instead of debating about politics or sports whenever we get together, what if families spent some time having candid discussions about their finances and plans for the future?
We know money is a tough topic for many families to broach. For the older generation, it can bring up the issue of aging, our mortality, even our successes and failures. Younger family members may also have difficulty acknowledging that their parents won't be here someday, as well as other feelings driven by family dynamics.
Whatever the reason, know this: without a plan for finances, a family could run the risk of not making the best use of whatever wealth they have accumulated.
Touching on a touchy subject
Whether you’re a parent wanting to tell your adult children about your plans or one of the parent’s children wanting to know where things stand, there’s no better time to talk than now.
Major holidays or significant family events may draw family together, and many times serve as a good time to sit together and have open and candid conversations about money.
Use what you know about your family’s dynamics to have the conversation. If there’s one admired family member who puts everyone at ease, ask that person to initiate the process and bring each generation into the discussion. Telling stories about other families and how they have handled money may be effective.
It always helps to establish a level of comfort that will encourage family members to open up and speak honestly about financial issues, so use your next family gathering as an opportunity to lay the groundwork for conversation.
Cover all your bases
At some point, adult children may need to step into a more active role with their parents’ finances and care. They need to know what’s already in place and where their help might be needed. Parents should discuss their current financial situation so that no one is caught off guard if they need to step in and help.
It’s also a chance for parents to lend their advice and share the financial lessons they’ve learned from a lifetime of experience.
There are two connected components in these talks: health care and finances. On the health care side, adult children need to understand what kind of elder care parents have in mind. Do parents want to receive care in their own home or move into a facility? How are they going to cover long-term care payments? Who has the power to make medical decisions on the parents’ behalf if they become incapacitated?
Parents should properly designate beneficiaries on all accounts, have an updated will, and assign someone to have financial power of attorney to assume bill paying if they can no longer do it for themselves. Further, parents should assemble a list of all their financial accounts with location and password information.
Taking the lead
In an ideal world, it’s best when parents start the conversation. After all, it’s their money and their health that’s at the center of the talk.
However, there might be times when adult children must be prepared to take the lead. In this case, younger family members should try these openers to ease everyone way into the conversation:
Make your own plans
Your parents might be more agreeable to a conversation about long-term care and how to pay for it if you share your plans for your own care. If you’ve set up a way to pay for long-term care, use it as an opportunity to find out what your parents have in mind for themselves.
Talk about your friends
If a friend’s family has a good financial plan in place, share it with your parents. A real-life example is always a good entry point to talking about your own family’s situation.
Jot it down
If your parents aren’t the talking type, ask them to jot down important financial information on paper. You can go back and ask them to clarify later.
It’s worth it
While it may be difficult to start a candid discussion about money and the future, the benefits of having knowledge and a financial plan in place far outweigh any awkwardness that may occur. The next time your family is gathered together, try striking up an honest conversation—it’ll be worth it.