What’s the hardest thing to talk about? Death, religion, politics? Would it surprise you to know that one of the most difficult things to discuss is money? More than half of Americans say that they’re not comfortable talking about money with anyone—including their parents and romantic partners.1
Perhaps this is because money represents more than a deeply personal topic – it can represent control, power, embarrassment, insecurity, fear. For some people, the hesitation stems from a natural reluctance to confront their own mortality or their potential for future disability. For others, avoiding the reflects a belief that planning is associated with complicated—and expensive—legal and tax issues.
Silence Can Be Harmful
Avoiding these sometimes-difficult conversations about family finances can have detrimental outcomes and unexpected consequences for your family, such as:
Passing On Bad Habits - Talking to your children about money now can help them avoid mistakes in the future and help them feel more comfortable coming to you with financial questions. The key is to talk about what money means to you and why you worked hard to achieve your success. It involves being open about the challenges and responsibilities that accompany wealth–including mistakes you may have made and what you might have wished you’d done differently when younger. And, most important, it’s about your values and what you wish for yourself and your children to accomplish with your privilege.
The conversation can serve as an empowering first step to forming a healthy relationship with wealth. It can also give potential heirs a framework from which to make future money decisions, so they’re not immediately using a windfall to make large purchases without thinking about their own long-term plan.
Lost Opportunities - It’s never too early for your children to understand the value of creating a wealth plan that takes family members’ needs into account. Family members should understand each other’s priorities around money topics, including long-term health care needs, charitable giving and generational gifting strategies. Taking the time to establish common goals is the first step in understanding how all members can participate in achieving them.
But only about a quarter of those planning to leave an inheritance to their heirs feel that those heirs are well informed about the wealth that they’re receive.2 Lack of communication can lead to misunderstandings and divergent objectives that could jeopardize your legacy and work against your values.
Costly Procrastination - Perhaps the hardest of conversations to have as an adult is with your aging parents. This is where the danger of putting off discussions of family finances grows exponentially. According to the U.S. Department of Health and Human services, 70% of people over 65 will require some long-term care at some point in their lives.3 Once a crisis hits, it’s often too late. Now is the time to make long-term health care plans and decide who will make financial decisions on your parents’ behalf if they lose the ability to safely handle their money. Proper planning gives you time to discuss your decisions with family members, having multiple conversations over time. This open communication can help reduce, if not eliminate, the risk of family discord, resentment, or conflict.
