Having Honest Money Conversations With Family

Talking To Family About MoneyMoney is an uncomfortable topic. In fact, more often than not, just thinking about money leaves us feeling overwhelmed, guilty, or a little bit ticked off. We develop feelings about money (and how to use it) from a really young age. These feelings and ideas are based in what we learned from our parents, or what we saw they doing, and how the people around us dealt with their money. Not all of the habits we pick up are identical to what people around us do. Sometimes the way we treat money is the polar opposite of what our parents, grandparents, or siblings have done because we’re determined not to get ourselves in a similar financial mess. Other times, we gain our values directly from them – for better or worse.

It’s not easy to uncover how we feel about money, or why we act the way we do when it comes to our personal finances. It’s even tougher to talk to family members, or close friends, about our money behaviors. But in order to build a solid financial foundation, it can be helpful to have clear conversations about your family’s money with the people who your actions will impact. For most people, this includes your partner, your kids, and your parents.

Talking To Your Partner

When you’re married, or in a committed relationship where sharing finances makes sense, it’s important that you talk about a few money-related things. A lot of your big life decisions are going to be rooted in your shared finances, and getting the basics of how you each approach financial planning on the table can help you to make decisions together (and avoid some major arguments down the road). A few questions you should ask one another are:

  • Do you think debt or savings should be a priority as we start our family?
  • What emergency savings “number” do you need to have in the bank to feel comfortable?
  • What type of home do you want to purchase, and how do you want to finance that purchase?
  • Do we, as a couple, believe in lending money to friends or family members who need it (and may or may not pay us back)?
  • What type of spending habits do you have?
  • How do you feel about debt?
  • How do we, as a couple (or as a family), want to set up our budget? (Learn more about budgeting here)

Other questions are going to crop up with time, but these are a good place to start. By opening the lines of communication when it comes to your shared finances, you’re setting yourselves up to support one another in making better financial decisions for yourselves and your family.

Communicating With Your Kids About Money 

Just like you learned about money from your parents, your kids learn about money from you. Depending on how old your kids are, you might not be able to get into specifics with them just yet. Explaining student loans, interest rates, or debt consolidation to a five-year-old may not go over so well. But when your kids are young, you can start instilling some basic financial lessons with them.

This might mean helping them “budget” their allowance, helping them weigh the costs and benefits of buying a new toy versus going to the movie they’ve wanted to see, or talking to them about the importance of saving. Typically, we recommend Typically, we recommend a “kid-sized” budget that reflects your own. For example, if you’re working on implementing the 10/20/30/40 budget into your life, your kids should be implementing a 10/40/50 budget into theirs. This would be 10% of their allowance for giving, 40% goes toward saving and 50% for spending. As your kids get older, you can even let them in on family budget meetings, and help them to understand what type of funds are coming in, how they’re getting spent, and why “cutting back” in some areas makes the best financial sense for the whole family.

Speaking With Your Parents 

Talking to mom and dad about money may be the most uncomfortable finance conversation we can imagine. Nobody wants to come across as disrespectful, but it’s still important to start these conversations now. A few money-related questions you might want to ask your parents are:

  • Do you have an estate plan?
  • Who is the executor of your estate – and if it’s me, what do I need to do/who do I need to talk to in order to carry out your will or financial wishes?
  • Are you planning on staying in your home long-term, or do you want to downsize?
  • Are you working with a financial planner?
  • Have you recently updated beneficiaries on your accounts?
  • How can I help you create a financial plan that builds toward the type of legacy you want to leave as a family?
  • Are you planning to retire? If so, when?
  • What type of insurance coverage do you have? Do you need to update your coverage to protect yourself against future potential medical costs as you age?

If you approach money conversations with parents with respect and love, you’re more likely to get a valuable response. Remember, you’re not asking these things because you want to pry. You just want to make sure your parents are well taken care of and protected, and you want to help if you can.

Staying Honest With Yourself

This might be the hardest “conversation” to have around money. When was the last time you took a hard look at your money habits and worked to improve them? More than likely, you’ve taken a few stabs at this in the past, but you’ve also fallen down. That might mean you tried to stick to a budget and failed miserably, or maybe you set financial goals for yourself that you didn’t quite hit. Either way, it’s valuable to be able to look at your own feelings about money, and to stay honest with yourself as these feelings evolve.

Need help? Talking to a financial planner is a great way to facilitate money conversations – either with yourself, or with family members. I’d love to help you work through how to start these conversations, or even sit in on them as an impartial third party to reduce the inevitable awkwardness we feel when discussing our finances. Contact me to day to set up a call.

Want to learn more about the 10/20/30/40 budget that we talked about in this blog post? Sign up for our FREE 10/20/30/40 budgeting guide by clicking here!