Last week I talked about how women are having more conversations and becoming more involved in the family finances. This week, it’s all about how to talk about money, using for different conversations at examples. The article for today’s post is “How to Navigate Uncomfortable Money Matters with Your Family,” from CNBC. 47% of Americans struggle to discuss finances with their families. Don’t be one of them.

As you’ll notice, the theme of these conversations is not to shy away from them. The most important thing is to talk to one another. For some reason, over the years, talking about money has become a taboo topic. All that this does is hide potential issues and prevent sharing pertinent information, either between partners or passed from one generation to the next.

While these conversations can become heated, the key is to then step away and revisit the topic when everyone has calmed. The potential for, or actual, arguments that can arise when discussing finance can prevent many from continuing.

What Happens When You Don’t Talk

This is what happened with my parents. They would fight when they discussed money, so my mom just decided to step back and let me dad do it. To their credit, this worked for about 20 years. The problems started when he was developed early onset Alzheimer’s at age 49. The lack of these crucial conversations caused many difficulties for my mom in running the house and in my dad’s care as well. However, if families can push past these difficulties in conversation then, I strongly agree with Winnie Sun when she says:

Having these more intimate financial discussions can actually bring your family closer.

Winnie Sun, co-founder and managing director of Sun Group Wealth Partners

This is one of the only issues I have with couples keeping finances separate. There are many that never join finances and overall, this is a fine approach. Keeping separate finances doesn’t mean that there should be a lack of awareness. If one half of the partnership becomes ill or suddenly passes, knowing where and what everything is that they have will become very important, very fast. I’d suggest keeping an ICE binder, like that from Smart Money Mamas. This way, the finances are kept separate, but when things hit the fan both partners need to know what’s going on.

How to Talk About Money

Generally, you’ll want to use a time when everyone is calm, cool and collected. Brooch the topic from a point of view where perhaps, as the child, you are asking their advice. Whether or not you need that advice doesn’t matter, but it helps to say: “I’m working on my estate plan. How did you do yours?” This comes off as unassuming, while still finding out exactly what you need to know.

If this is your partner that you need to discuss things with, perhaps use an example of someone who wasn’t prepared. “You know, with Larry passing away, Mary’s been left with a lot to handle. It made me think. What would I need to know if something happened to you?” This brings up your concerns and shows why you would need to know this information sooner rather than later.

Additionally, when you find out something that you may not agree with, it’s best not to get judgmental. For example, if your parent’s don’t have an estate plan, do not judge. Perhaps say. “Oh, well, maybe that’s something we can do together then.” Remember, you’re family. You’re all on the same team and it’s important to keep that at the forefront.

Not During the Holiday Meal

Hopefully this year, everyone will be socially distancing and not having large family gatherings. With that in mind, even in a normal year, the holiday gathering isn’t necessarily the best time to bring up a hard topic like family finances. Cameron Huddleston, author of “Mom and Dad, We Need to Talk”, says why:

  • There may be too many people present who don’t need to be part of the conversation.
  • Booze. Enough said.
  • Tensions may already be high (with this year’s election, I especially wouldn’t be surprised).

Examples of Tough Conversations

What I really love about this article is that it gets into some examples of these difficult finance discussions.

Requests for Loans of Financial Support

If someone in your family asks for a loan or financial support, most importantly you should follow your gut. If you’re uncomfortable with it, don’t do it. Easier said than done, but really it’s best to go into these type of arrangements with the expectation that you will not be paid back. If you can stomach that possible reality, then go for it. Otherwise, tell them directly, so that they do not linger waiting for your decision and can go elsewhere.

Don’t beat yourself up if you say “no.” Money management is emotional, said Newcomb. Just remember that you shouldn’t undermine your own financial stability.

Sarah Newcomb, Director of Behavioral Sciences at Morningstar

Adult Kids at Home

More and more, young adults are moving home to live with their parents and 2020 only increased these numbers. Parents and young adults need to talk, not just about finances, but about all of the conditions surrounding this arrangement. Will rent be paid? What chores are expected? What other ways are they expected to contribute? Set these ground rules up front to ensure that everyone gets what they want and need from the arrangement.

Spending Money on the ‘Wrong’ Thing

Whether it’s a spouse, child or another relationship, no one is going to agree on how to prioritize money all of the time. Keeping in mind that personal finance is personal is critical here. It’s all about that person’s priorities

Every decision people make with their money is a genuine attempt to meet a real and valid human need. For instance, if you see someone spending a lot of money going out with friends, you may view that as irresponsible — or you can say they really prioritize their social relationships.

Sarah Newcomb

If there are issues with a particular trend of spending, perhaps it is best to bring up non-threatening questions related to long term goals. Perhaps reframing these goals and suggesting ways to meet the needs in less expensive ways can help guide extravagant spenders towards more reasonable purchases. However, it’s important to keep in mind that if their choices do not affect the other person, then they do not get to weigh in. Dictating what is or is not important to someone else is not a good way to be in any relationship.

Estate Planning

They saved the most important for last here. This conversation will alter the entire future of the family, one way or the other. Keep in mind that letting the parent drive the conversation once the topic is brought up will maintain the sense of control they’ll need to open up. Estate planning will not just be one conversation though. It will be a series of conversation and touch points that happen over weeks, months or even years to continually check in.

All I will say here, is that the key is to listen. Listen to their wishes and listen to their plan. For more, I highly recommend checking out my e-book on estate planning called “The Path Forward: Your Elder care Planning Checklist” or Cameron Huddleston’s “Mom and Dad We Need to Talk”.

Wrap It Up!

The major takeaways from this article are to keep calm and be clear about what you want and your intentions. Things may get messy, but take a break and try again another time. It’s important to be extremely clear on finances with your family. Who knows? It may just make you even closer.

Have you talked about finances with your family? How did it go? Do you have any tips to offer? Let me know in the comments below!