How to break the ice around family finances

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 While talking about money may make you feel uncomfortable, or feel ‘taboo’, avoiding the conversation can actually lead to unfavorable outcomes and unexpected consequences for your family.

Regardless of age, each member of your family can learn about the potential benefits of using money responsibly. Consider these important reasons to break the ice around family finances:

Introducing your children to finances now, can potentially help them cultivate a positive attitude towards money, and may ultimately help them navigate financial road bumps in the future.

The key is to share your values about money and how to manage it to meet important goals:

• Budgeting
• Saving
• Spending
• Investing

Educating your children while being open about the challenges and responsibilities that accompany money can serve as an empowering first step towards financial literacy.

Make financial planning a family affair. It’s never too early for your children to understand the value of creating a financial plan and budget. Encouraging them to earn their own money, save, and set their own financial goals can help lay the foundation for healthy spending habits.

If your children are a bit older, educate them on using credit wisely and being smart about debt. Help create common goals such as long-term health care, college savings, retirement planning, or charitable giving. And share your plans to help them achieve their goals as well as your own.

According to the US Department of Health and Human Services, 70% of people over 65 will require some long-term care at some point in their lives,² which is why having financial conversations with aging parents is critical. Once a crisis hits, it’s often too late.

Now is the time to determine if sufficient long-term health care plans have been made, as well as who will make financial decisions on your parents’ behalf if they lose the ability to safely handle their money.

Proper estate planning is an important step in potentially building wealth and preserving family finances. Transfers of wealth within a family should involve taking inventory of assets and establishing a will or trust to ensure that the last wishes of family members are honored. This open communication can help to reduce, if not eliminate, the risk of family discord, resentment, or conflict.

Here are a few questions that can make it easier:

• Did you talk about money as a family growing up? Do you think it’s important for our family to talk about money?
• At what age do you hope to retire?
• When is it ok to borrow money?
• What is your favorite charitable cause and why?
• How is your generation different about money from the generations before you?
• What financial legacy do you want to leave to your family? What goals would you want us to achieve? Would you want to help us do that and how?

Now, figure out what strategies you’ll use to reach your goals.

For example:

Sitting down to discuss your parents’ long-term health needs or checking in with your siblings to see if you are all on the same page isn’t easy. What about your children—do they value the same goals like education and home ownership and how do they expect to achieve them? Is your spouse prepared should something happen to you?

The tough part is getting started. Keep in mind: It’s not just a single conversation, but rather a series of talks that shift as your life changes and that may help you prepare to be financially stronger.

Article Footnotes

¹ Money and Relationship Survey, 2022,  https://www.financialeducatorscouncil.org/money-and-relationships/

² How Much Care Will You Need?, https://acl.gov/ltc/basic-needs/how-much-care-will-you-need

The source of this article, How to Break the Ice Around Family Finances, was originally published on August 9, 2023.

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