7 tips to keep it civil when talking family finances
Money can be awkward to discuss with anyone, much less family members. “It’s incredibly personal,” says Heather Winston, CFP®, assistant director of financial advice and planning at Principal®. “Not everybody is comfortable sharing the details of their financial lives—for a variety of reasons."
It doesn’t help that money is often grouped with religion and politics as topics to avoid in conversation. It’s hard to navigate the rules for engagement. There’s not a shared common language when it comes to money and family.
But you can’t avoid it sometimes. If you have aging parents, you may need to talk to Mom and Dad about their finances. Or if you have a sibling with special needs, you’ll probably have many conversations about long-term financial and caregiving plans. And if you’re sending a child to college, a frank discussion about what you can and can’t afford may be in order.
Bottom line: When you must talk money, there are ways to do it respectfully. Even peacefully.
1. Make it a real meeting.
Set a time and place—no surprise money talk for anyone. This gives family members time to think and to take the situation seriously. Plus, “taking a more formal, structured approach can keep conversations from being emotionally driven and make them factually based,” Winston says. Avoid the times you’re supposed to be celebrating together, such as Thanksgiving dinner or at the reunion. Holidays can be stressful enough. Set a separate, dedicated time to meet—before or after the festivities.
It’s OK if you don’t all live in the same town—use Facetime or Skype.
Once you have a meeting time, draft an agenda. Without one, Winston says, you can quickly drown in information and side conversations. Pick a broad topic, say insurance. Then outline the conversation points: How are the insurance policies titled? Where are they? What do they cover? Are there any gaps? How will those gaps be covered?
Choose someone to write down what you’ve covered together. Maybe you start a notebook or create a shared online folder for family affairs so you can keep track of what you’ve gone over, and what you have left to discuss.
2. Start with a small crowd. You can always make it bigger.
Like any meeting, you run the risk of losing focus if it gets too big. Maybe start with siblings in a money talk with your parents, and leave the spouses at home. If your mom has two sisters she’s close to, include them in your conversation with her instead of all her brothers and sisters.
However, Winston says, if you choose to keep the conversation small, communicate with the other interested parties. Ask them if they have any opinions or questions they’d like you to take into the discussion.
3. Don’t slip into old family roles.
That can happen when you get together. Your sister was the “smart” one. Your uncle was the “irresponsible” one with his finances. This is the time to take a fresh look at who you are now, as adults, and respect the perspective everyone brings to the table. That also means providing enough background information on the topic so everyone is on an even playing field.
4. Stay calm.
As best you can. Emotions can run high when you talk money. Assume everyone has good intentions and that you’ll all be better off talking about this together. If someone starts shutting down or gets defensive, Winston suggests pivoting the conversation with general questions. For example: How’d you learn about long-term care? What was it like when your parents had to cover their long-term care?
If the discussion gets too negative or “spirited,” table it for another time and tackle the stuff you can all deal with that day.
5. Listen. Really listen.
Even if you’re the one leading the conversation, don’t do all the talking. Pull out some paper to jot down notes if that helps you truly listen. And remember this is the time to talk, but not to criticize. If Dad let his long-term care policy lapse a few years ago, don’t judge. Listen and help him figure out the steps he can take to cover his expenses.
6. Don’t be afraid to ask for help.
“Sometimes it’s easier to have the conversation with someone who isn’t emotionally invested in the outcome,” Winston says.
Whether it’s a financial professional, a minister, or a trained counselor, an unbiased “outsider” can help keep the discussion moving or know when it’s time to take a break.
7. Revisit the conversation.
Phew. You did it! You had the talk, and you (mostly) kept the peace. Share out notes of what you talked about and any next steps.
Then start planning future conversations. These family finance talks probably won’t be one and done, and the situation could change over time. Talk about how that affects the financial plans and decisions you’ve made.
Talking to family members about money can be productive and a relief. If you can work through the initial awkwardness, an open and honest talk may help solidify family bonds and give everyone peace of mind.
The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.
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