Talking with your kids about money changes as they get older and as you get younger (of course). If this has been a conversation you have shared since they were young, it’s natural to continue to discuss financial matters as the years go on. In a perfect world this would be the way it is all the time. Unfortunately, the opposite is often true.
Communication is Important
Thinking of one’s mortality is not something any of us like to do. But your financial planning needs change as your life changes and unforeseen things happen everyday. Unfortunately, most families don’t discuss finances until there is some sort of crisis, like job loss, a divorce, disability, or even a pandemic. Then the money conversation is forced on a family during the time when they have the least amount of control over a situation. Talking with your adult children about money now is important—for your peace of mind, and theirs.
Myths that get in the way of financial conversations
Depending on the family dynamic, talking about your financial situation and future can be a loaded conversation. Here are a few myths that get in the way of having these important conversations.
Most people don’t like to talk about money and financial planning with their families. “It’s not polite.” “Or it’s none of anyone’s business.”
The reality is that it is someone’s business. It’s yours, and if you don’t share your plans with those around you, your wishes may not be followed. As you get older life can get more complicated. (This is especially true with today’s blended families.) Families grow and change. Marriage, divorce, buying/selling a home, children, grandchildren, remarriage. If you and your spouse have children from multiple marriages, having a will (or a trust in some circumstances), power of attorney, and a well thought out financial plan – and talking with your adult children about these documents — will alleviate any question about your wishes.
“It’s not going to happen.”
Sometimes we put off thinking about the inevitable by denying the truth of a situation. It is easy to play the denial game. It is as easy as saying “IF I die” instead of saying “when I die.” Eventually everyone dies. Sometimes death is after a long life and other times it's from an unforeseen event. By treating death as something that might happen instead of an inevitable natural life occurrence, we are putting off uncomfortable thoughts and conversations that may hurt us and our loved ones in the end.
“I’m not rich.”
If you feel you don’t have enough money or a sizeable estate to warrant a discussion about financial planning with your family, you should reconsider. Everyone should have a well thought out plan. Let’s say that your adult children are grown and financially secure on their own, and you live modestly with a dog for companionship. What will happen to your dog when you die? Will another family member understand the need to place your beloved pet in a caring home? Or perhaps you have family heirlooms that you would like to hand down to your children. If something were to happen, how will anyone know your wishes, if nothing is ever said?
“I’ll lose control.”
People sometimes feel that by talking about money they are giving up control of their lives or decisions. The reality is that you are doing the complete opposite. You are taking control of your future. Having an honest discussion and laying it all out can bring you peace of mind. It frees you up to enjoy life and your loved ones without worrying about the “what ifs.”
No one wants to lose control of their lives before they lose the capacity for choice. Take control of your decisions before your mental capacity ever becomes a question. The right answer is to have any important conversations early and often.
Talk with your adult children about money early (and often)
If you are unsure how to bring up the conversation, consider inviting your loved ones over for dinner, a family meeting, or scheduling a video conference. Just because you are talking about money and your financial plan doesn’t mean it needs to be an official serious meeting. If you are uncomfortable bringing up specific details of your net worth, that’s okay. What you can say is that you have a plan in place and share the location of it were anything to happen. Make sure you share what each family member needs to know.
But this conversation is not about your children, it’s about you. It allows you to live your life knowing that if something unexpected happens everything is ready and planned for the inevitable. It’s important to not leave important decisions to chance. Don’t wait for a friend to go through it before you take action. Have this important discussion early and it may be the beginning of a new chapter in your family relationships.
Heidi Clute, CFP® is co-owner of Clute Wealth Management in South Burlington, VT and Plattsburgh, NY, an independent firm and registered investment advisor that provides strategic financial and investment planning for individuals and small businesses in the Champlain Valley region of New York and Vermont. Clute Wealth Management and LPL are separate entities. Securities offered through LPL Financial. Member FINRA/SIPC. LPL Financial does not provide tax or legal advice. Clients should consult with their personal tax and/or legal advisors regarding your circumstances. The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations.
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