Northwestern MutualVoice: When Families Talk Openly About Money, It Pays
Talking to your parents about their financial situation can be difficult, to say the least. Financial conversations can be uncomfortable and, if handled poorly, can lead to confusion, hurt feelings or even resentment. With all those emotions involved, it’s easy to postpone the conversation or even forego it altogether. But according to Ben Beshear, wealth management advisor at Northwestern Mutual, it’s an important conversation to have.
“Adult children talking with parents about finances can be a great idea,” says Beshear. “In fact, we’ve found that good financial planning is usually found in families with healthy relationships and transparent communication. Some families even plan together, side by side. Entire families become financially stronger that way.”
Of course, when you have these financial discussions, it would be wonderful to find out that your parents are in good financial shape—that they’ve planned well and don’t have any concerns about their future finances. The peace of mind you gain from a conversation in which you discover that your parents have their future well planned can be enormous.
But there are other possibilities. You could learn that your parents are doing well and are planning to pass money down to the family. Knowing that ahead of time can help you plan for your own financial future or potentially help them plan for how best to pass that money on, whether it’s finding a way to help ease estate taxes or suggesting that a college fund for their grandchildren would help everyone the most.
There is, of course, also the chance that you’ll discover your parents are in financial trouble or that they’re concerned about the future. If that’s the case, you may be able to help them plan for the future or, if your own situation allows, maybe even help them partially fund their retirement.
“No matter what you discover when having the conversation, you find out where things stand,” says Beshear, “and that’s advantageous.”
Kick-Starting the Conversation
In most families, money is personal. It’s not easy to talk about. If you’re concerned it’s a touchy subject that might cause suspicion or resentment in your family, there are good places to start. First, consider that your parents may already want to talk.
“People retiring now represent the first generation who had to do their own financial planning. Retirees in the prior generation were more likely to have company pensions for income. Typically, less money was needed because lifespans were shorter. So when today’s retirees were adult kids, they probably never felt the need to talk with their parents about money,” says Beshear. “But what we’ve seen among parents that are in good financial shape is a willingness to drop hints to their kids about their financial situations.”
Parents may express interest in paying for a family vacation or contributing to college education funds. They may ask a question about stocks, taxes or Social Security. These questions are door openers you can use to initiate a conversation about finances in general.
If your parents aren’t bringing up topics related to money, take the first step by broaching the subject delicately. Begin by talking about your own situation, whether you have financial plans in place or just a desire to get started:
- Casually mention that you’re creating a will or reviewing investments, and your financial professional asked how your plans might affect them. Suggesting that your financial professional recommended the talk can remove potential misunderstanding over why you brought up the subject.
- Tell your parents that with all the stories you’ve read about retirement concerns, you have decided to begin formal planning. Ask if they can recommend a financial professional or whether they’re interested in planning with you.
Be careful not to probe too soon about budgets or how parents are spending money. Such questions can insinuate that you’re taking on the role of parent and may be met with resentment or an abrupt end to the conversation.
Before initiating a discussion, invite siblings into the dialogue. Let them know you’re planning a talk with Mom and Dad about money because you believe their planning may affect your own. Give siblings the option to join or receive an update later from you. You may discover that one sibling already has information about Mom and Dad’s finances, which could change the way you approach your conversation.
While starting the conversation with your parents can be difficult, it’s best to have the conversation as early as you can. At the very least it could lead to your peace of mind, and at the most it could help everyone plan for a better financial future.
“There’s really nothing to lose by trying,” says Beshear.
The Northwestern MutualVoice Team is a group of professionals who share insights and opinions from experts and industry leaders across the enterprise. Our vision is to inspire others to take action and plan for their financial future through topics ranging from financial planning, retirement planning and distribution strategies, wealth accumulation and preservation, to leadership, philanthropy and innovation.