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Talking about money

With Thanksgiving just around the corner, most of us will be gathered around the table with relatives and friends.

You’ve heard it and I’ve heard it—never discuss religion and politics. It’s easy to understand why. Some folks hold very strong opinions, and it’s easy to get swept up into an unwinnable argument. These potential arguments don't sit well with proper digestion.

Interestingly enough, though, politics and religion aren’t the only topics considered the most difficult subjects to tackle.

Personal finance discussions can be right up there with religion and politics.

Most adults learned the importance of saving from their parents. Yet, talking about money can be one of the most difficult things for people to do.

Sadly, many have a hard time discussing money with their spouse or partner, and more often than not, end up in heated discussions.

But it doesn’t have to be that way. This month, I’ve put together an outline you may use as a guide for getting through these conversations cooperatively.

Money talk with your spouse

When discussing financial matters with your spouse, it’s important that you find shared ground. Otherwise, you’ll be working toward different goals, and the risk of failure, frustration, and arguments are high.

Let me provide you with an example. I know a couple that’s been married almost 10 years. Each year, we come up with an area of focus.

When we met, they came up with two goals— ‘Still have fun’ and ‘debt reduction.’ "Steve" told me their first year of marriage was a blast. You could see it in his body language; you could see it in his eyes as he shared his experiences. He and his wife created lasting memories. They traveled, ate out quite a bit, and attended many concerts.

Even though they earned a good income, this lifestyle led them to accumulate over $30,000 in debt. As their life together has progressed, goals have changed. Today, they have two young kids and now that the debt is almost gone, want to focus on buying a house. Even though "Steve" wants to buy a house, he is a little less willing to do what is necessary to allow that to happen. "Mary" sometimes gets frustrated when "Steve" doesn't stick to the plan.

What might be the best way to talk about money with your spouse? If you are not working with a financial planner, start by going on a date—a money date (if debt is an issue, stick to a lower cost venue). Get out of the house, get away from distractions, and leave the kids with a sitter. Here’s where you’ll discuss goals and craft a plan. Nothing is off limits. You may discuss retirement savings, large purchases, debt reduction, a down payment on a new home, or bolstering your savings.

Yet, don’t overindulge. It’s one step at a time. Retirement savings may be the first topic. Or getting out from under credit card debt may be your first challenge.

Come up with realistic goals together and check in on a regular basis. When you’ve accomplished various goals, reward yourself.  When I work with couples that are paying down debt, one "reward" I suggest is when one credit card is paid off, is to take the monthly payment you were making, and treat yourself to a nice dinner out. Then, chip away at the next card by adding the old payment onto the new one.  This snowball effect will get you out of debt faster.

Talking with aging parents

Many parents rarely discuss their finances with their children. Their parents didn’t share details, and they don’t feel obliged to break with family tradition.

A survey from GoBankingRates found 73% of Americans haven’t had this discussion with Mom and Dad. Respondents ages 45-54 were the most likely to say that they haven’t broached the subject because they are not comfortable with the topic.

That’s understandable. Besides, many don’t know how to begin the conversation.

So, here are some tips to help you get the conversation started with your parents:

  1. Express genuine concern. You care about what’s going on with your parents, and it extends beyond their financial situation. While money matters may seem difficult to explore, let them know you are having the discussion because you love them and want to be sure they are being taken care of as they age.

They may be open to talking or they may take time to process your invitation.

  1. Tell parents “My financial advisor made me do it.” One way to jumpstart the conversation is to point the finger at us. “I was talking to my financial advisor the other day, and they said we should have a talk.” Or, “I was reading my newsletter from my advisor, and they emphasized the importance of having a conversation about finances with you.”

Leveraging our credibility, or the credibility of another trusted advisor, can go a long way in opening doors.

  1. Elder fraud may be on their minds. Not comfortable jumping in? Scams that target the elderly (and for that matter, all of us) have exploded. None of us want our parents to become victims because there is little we can do to undo the damage. Money lost will never be money recovered. Expressing genuine concern by sharing articles on elder fraud is a good way to ease into the subject.

 

  1. Give an example. If you believe the situation is appropriate, you may talk about a friend or acquaintance whose lack of planning negatively impacted the family. Over the years, I've gathered many a sad story of those that didn't seek expert advice and have made irreversible decisions.  I'm happy to share these stories with you.

Or, you may have read about someone who was an unfortunate victim. Such scams hit home because we see ourselves or close family members as potential victims.

  1. Discuss your own experiences. Open up to Mom and Dad about your retirement planning, 401k decisions, debt payoffs, or student loans. Or, casually mention the new life insurance policy you have taken out. You know, just in case something happens.

Your spouse knows about the policy. However, if you are single and the proceeds will help pay for your funeral and assist your kids, it’s important that your folks know you have insurance.

When you share something that is personal to you, your parents may become more willing to open up about themselves.

  1. Focus estate planning on their priorities. Stay away from who gets what. Make this about them, not you. The goal is setting up the will or trust. Emphasize they can do what they want with their assets. If it’s something they haven’t done, checking the ‘estate-planning’ box will lift a burden that’s likely been simmering in the back of their minds. Again, I can be a resource for you or them by providing other professionals to get things done.

 

  1. Make things easier. For parents that need it, have you thought about helping your parents with a budget, paying the bills, online banking, or helping with credit? Simply getting your parents to tidy up loose ends can pay huge dividends for them.

One thing we have done here at Financial Planning Solutions, LLC is to offer a complimentary meeting with adult children of clients to see how we can help get them on track better for a more secure financial life.

Remember, we are here to assist you. Meeting in a neutral territory, such as our office, can help keep the lines between personal matters and finances from blurring. We know these conversations can be difficult and awkward. If we can help you, please let us know. We’re simply an email or phone call away.

 

All the best.

Rick Fingerman, CFP®

Rick@PlanWithFPS.com

617-630-4978

 

Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.

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