The reality is that the conversation may never be easy.
"I don't want to talk about my money," your dad says. "It's not something I like to think about."
"But when you don't have enough money, it's hard not to think about it all the time," you reply.
You can see that this conversation may be difficult for both of you. If your parents aren't ready for the talk, try again later—maybe in six months or a year. Make sure you offer some reassurance first: "I know this is hard for both of us, but I'm here now because I love and care about you."
You need to make sure you're talking about the right things.
When you're ready to talk about your money, it's critical that you start with a list of topics and goals in mind. You should also be prepared for the conversation by knowing the facts: How much money do you have? Where does it go? What are your financial priorities?
What's more important than these questions is how they all relate back to one another. In other words, what is your end goal here? Is it saving more money or starting an investment account? The best way to ensure that every topic is addressed properly is by making sure that all of them support an overarching goal (which should also be written down). It may take several meetings before everything comes up—and even then, some conversations are just going to happen over time rather than in one sitting—but having a clear vision will help keep things on track while still giving everyone their say.
Make sure everyone involved understands the situation clearly, and that you have a common understanding of the goal.
In many families, financial conversations can be a source of tension and disagreement. One reason for this is that people don’t understand their own goals or the family’s common goal.
For example, if one person wants to buy an expensive new car while another person wants to save for retirement, these goals are likely incompatible. If you don't have a common understanding of your goals as a family (and even more so when there's conflict about those goals), then it's unlikely that any financial plan will work well in the long term.
To get everyone on the same page, start by discussing what everyone needs and wants from life (i.e., what they want out of their money). Then move on to discussing how much money they need each year to achieve those things—and how much risk they're willing to take in order to get there faster (or slower).
You may have to have this conversation more than once.
It's not uncommon for a family member to forget what they were told, or for things to change around them that make the information you gave them less relevant. Even if you don't get everything sorted out during your initial conversation, at least it will be a starting place.
You will have to revisit the conversation as things change–and even when things remain static! For example, say your parents ask you which bank account their monthly Social Security check should go into and then never ask again. If something does happen later on down the line (like Mom and Dad moving in with one of their kids), it can become hard to remember why you all decided on those specific choices originally.
Be respectful of your parents' decisions and wishes.
It can be difficult for children to understand why their parents make certain financial choices, but it's important that you respect these choices as well. If there are areas where you disagree with your parents' decisions, bring them up when they're alone with you—not in front of others or at a time when there's tension in the air (such as during an argument).
If you feel strongly about any particular matter involving money and family, it's fine to state your case respectfully and ask questions about why someone made a particular decision. However, if the person receiving the question feels like they're being attacked or judged unfairly, have some empathy for them and try not to make things uncomfortable. Everyone has different comfort levels when it comes to discussing money matters privately versus publicly.
Be respectful of other people's choices. Your parents may decide that it makes more sense for them financially not to buy life insurance coverage or put their money into investments; even though those might be good ideas for someone else (like yourself), don't assume that those same ideas will necessarily work out well for everyone else.
Financial conversations can be hard, but they are important.
The way you and your family handle money affects your well-being and financial security.
It’s not uncommon to feel nervous or uncomfortable when discussing money with a family member. Many people don’t know where to begin, or worry that talking about finances will cause conflict in their relationships. Others may feel like their parents or grandparents have always handled the finances and are uneasy about taking responsibility; this can lead them to avoid these conversations altogether.
But it’s important for everyone involved—parents, children, and grandchildren alike—to understand each other's financial situations so they can make informed decisions together on how best to manage money as a group going forward.
-The NestedFunds Team