retirement

Talking to Your Family About Money

Being open and honest with your parents, your children and yourselves can be daunting, but it's necessary for financial wellness. Here are a few strategies for breaking the ice.

Talking about money can often be considered taboo. In fact, we often see that closest friends share even the most intimate details of their lives with each other — except they still don’t talk about money. And a recent study showed that at a dinner party, people would rather discuss romance, religion, medical conditions or even politics than talk about their salary.

When you add family dynamics to the mix, talking about money can even be emotional. Perhaps your parents are nearing retirement, and you’re concerned about how much they’ve saved. As parents age, the caregiver becomes the cared for, and that naturally brings thoughts of the future. Are their finances in order? Will the burden of paying for their health care fall on you? How would you pay for a funeral?

Similarly tricky is talking to your children about money. What do you say when they want that $250 pair of sneakers? And how are your own money habits? Your children are paying attention to how you prioritize spending, whether you realize it or not.

Difficult money conversations are not something you just bring up at a family barbecue. When it comes to your aging parents, you’re confronting the conversation around dying, and it’s difficult. When it comes to your own children, it’s about setting an example for good money habits. And if you don’t speak with your own children about money, they’re going to find it difficult to speak with you as you age.

Talking with our aging parents and our children about money and the future is critical to their financial wellness — and our own. Prudential’s recent Financial Wellness Census found that most Americans (75%) cite having enough savings to last through retirement as a priority. Yet nearly a third of Americans don’t have a realistic picture of their own financial health. They either believe they are closer to their goals than they really are, or think they are further from their goals than they actually are.

If we don’t have a clear picture of our own finances, how can we possibly understand those of our parents and set an example for our children? Communication is key to financial wellness. Here are a few tips to have those tough conversations with respect, tact and care.

1. The regular check-in.

If you notice your parents’ bills are not getting paid on time and things are starting to slip, offer a helping hand. Use these moments as entry points to start a conversation about their finances. Consider regular check-ins to help make sure they stay on top of not just finances, but also health and wellness. Waiting until a medical crisis or some other unexpected change hits can take an emotional toll and lead to costly ill-considered decisions. In fact, 85% of long-term care decisions are made during a medical crisis. Avoid being forced to make important financial decisions under emotional, high-stress conditions with a regular check-in instead.

2. The casual conversation.

Roughly one-third of parents over the age of 60 say they’ve never discussed later-life needs with family. But it’s important to talk about. Consider starting from a low-pressure, advice-seeking standpoint. “Hey, Mom and Dad, here’s what I’ve been thinking about for my own finances. Have you thought about this, too?” Or, “I’m concerned about what might happen to my kids if something happens to me. Have you thought about that?” Coming at it from that angle breaks the ice and can make it less daunting.

3. The family meeting.

Setting up family meetings with your adviser can create a neutral territory for productive discussions. The conversation might go something like this: “I’m trying to get some things organized. I’m meeting with my financial adviser to get some advice. Would you come with me?” Bringing your parent to meet with your financial adviser takes the onus off you. The adviser can start a conversation with smaller concepts, like health care proxies. From there it is easier to tackle harder conversations about health care planning. The key is easing into these conversations through your adviser or financial planner.

4. The responsible parent.

Focusing on your own financial planning has added benefits. Remember, you’re aging too. What happens when your children try to have these same conversations with you someday? Are you prepared for that — and will they be? You can pave the way now and be a model for your children on how to be financially responsible. Be more transparent about how you use money and why. You can also leverage these moments into more difficult conversations. “If something happens to me, don’t worry. This is how we’ll handle it.” This approach also forces you as a parent to be on top of your financial game. Kids watch everything, so be a role model.

5. The age-appropriate conversation.

Teaching our children financial literacy is important at every age. If they are financially literate early on, chances are the conversations around finances as you age will be easier to broach. But it’s important to keep these conversations age-appropriate. For example, some money lessons are most impactful if you tie them to an upcoming life event. If you have college-age children, talk to them about debt and get them thinking about the consequences before taking out an education loan.

I have three older children, and my mother lives with me, so this is real for me, too. As a lawyer, my family is used to me speaking more matter-of-factly about things. Still, when I talk to my own children about these topics they look at me funny and wonder if something is wrong. I reassure them that everything is fine and that I’m letting them know just in case.

And whether it’s talking to your aging relatives, your own children or even working on your own finances, being prepared for the “just in case” is the key to financial wellness.

1023863-00001-00

About the Author

Salene Hitchcock-Gear, President of Prudential Individual Life Insurance

President of Prudential Individual Life Insurance, Prudential Financial

Salene Hitchcock-Gear is president of Prudential Individual Life Insurance. She represents Prudential as a director on the Women Presidents’ Organization Advisory Board and also serves on the board of trustees of the American College of Financial Services. In addition, Hitchcock-Gear has a bachelor’s degree from the University of Michigan, a Juris Doctor degree from New York University School of Law, as well as FINRA Series 7 and 24 securities licenses. She is a member of the New York State Bar Association.

Most Popular

What Are the Income Tax Brackets for 2022 vs. 2021?
tax brackets

What Are the Income Tax Brackets for 2022 vs. 2021?

Depending on your taxable income, you can end up in one of seven different federal income tax brackets – each with its own marginal tax rate.
September 20, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
What Is the Social Security COLA?
retirement

What Is the Social Security COLA?

Consumer prices have spiked this year, meaning a higher Social Security cost-of-living adjustment for 2023.
September 16, 2022

Recommended

Taxes in Retirement: How All 50 States Tax Retirees
Tax Breaks

Taxes in Retirement: How All 50 States Tax Retirees

We rated every state, plus the District of Columbia, on how retirees are taxed. Some of the results might surprise you.
September 23, 2022
How Much Does Amazon Prime Cost (And Is It Worth It?)
Amazon Prime

How Much Does Amazon Prime Cost (And Is It Worth It?)

Plenty of prices are higher in 2022 and membership in Amazon Prime (up 17%) is no exception. Are you still getting your money’s worth? We’ll test the …
September 22, 2022
Using Your 401(k) to Delay Getting Social Security and Increase Payments
retirement

Using Your 401(k) to Delay Getting Social Security and Increase Payments

Your 401(k) can be a bridge from retirement to higher monthly income.
September 21, 2022
How to Keep More Money in Retirement: Tax Diversification
Making Your Money Last

How to Keep More Money in Retirement: Tax Diversification

No one likes paying taxes, especially once you've retired and are no longer earning a paycheck. So here are some steps to consider now that could help…
September 20, 2022