Are you prepared to help your parents manage their personal finances as they age? Money Girl and Cameron Huddleston talk about her new book and the right way to have essential conversations with your parents about their money.
Talking with aging parents about their money and future wishes can be a touchy subject. It’s not always easy to know how much or how little we should be involved in their financial lives. Plus, parents can be reluctant to open up about their finances, and kids might not know exactly what to do or say to get prepared for the future.
I interviewed Cameron Huddleston, author of Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents About Their Finances, to talk about this often-difficult topic.
Cameron is an award-winning journalist with more than 17 years of experience writing about personal finance. U.S. News & World Report named her one of the top personal finance experts to follow on Twitter.
Her work has appeared in Kiplinger's Personal Finance, Business Insider, Chicago Tribune, Fortune, MSN, USA Today, Yahoo and many more print and online publications. She’s been featured on MSNBC, CNN, “Fox & Friends,” ABC News Radio, Wall Street Journal Radio, NPR and other personal finance radio shows nationwide. She’s been interviewed and quoted as an expert in The New York Times, Chicago Tribune, BBC.com, MarketWatch and more.
On the Money Girl podcast, Cameron and I chat about conversation starters and strategies to communicate with your parents about their finances the best ways possible. We cover:
- Why having money talks sooner rather than later is so important.
- Strategies to start conversations that aren’t awkward or upsetting.
- Key legal documents your parents should have to protect their final wishes.
- The challenges that a parent’s memory issues can bring to estate planning.
- What to do if your parents aren’t prepared for retirement or are struggling financially.
- How to use long-term care insurance to manage a parent’s future care expenses.
- Ideas for aging parents to manage debt and cut expenses to free up more cash.
Use these tips from Cameron Huddleston to communicate more effectively about money with your parents:
10 Things to Know About Talking to Your Parents About Their Finances
Adult children need to have conversations with their parents about their parents’ finances. Here’s why and what to know about having these conversations based on tips from my new book.
1. This is a conversation that can’t wait.
More than 70 percent of adults have not had detailed conversations with their parents about their finances, according to a survey by personal finance website GOBankingRates. Nearly half of adults think the conversation doesn’t need to happen until their parents start to have health issues, show signs they need help, or actually ask for help. But at this point, it can be too late.
It’s so much better to have these conversations when your parents are healthy so you can talk about “what if” scenarios and make a plan for dealing with them.
If you wait until an emergency strikes to talk to your parents about their finances, emotions will be running high. Trying to talk about money matters will make a difficult situation even more stressful. It’s so much better to have these conversations when your parents are healthy so you can talk about “what if” scenarios and make a plan for dealing with them. And you can ensure that your parents have all of the necessary legal documents in place that would allow you or another family member to step in and make financial or health care decisions for them if they no longer can.
2. The conversation won’t be as awkward as you think.
Talking to your parents about their finances can seem difficult. People often say they’re afraid to have this conversation because money is such a taboo topic. But there are a few things you need to realize.
For starters, your fears about talking to your parents about their finances are probably overblown. These are your parents after all. They’re not going to stop loving you just because you ask them to have a conversation about their finances. Plus, if you make it clear that you’re asking about their finances out of concern for their well-being, they will see that you have their best interest at heart.
3. Talking to your siblings is important.
Make sure you talk with your siblings before talking to your parents so all of you can get on the same page. Decide who will initiate the conversation with your parents, when the conversation will happen, whether all of you will be present and what roles each of you is willing to play if your parents need help.
To ensure the conversation goes smoothly, make a list of the topics you’d like to discuss before you meet with your siblings. You could even send your siblings your list of the topics you want to address before you meet so they will be prepared to have a fruitful conversation.
4. The conversation should be planned, not done on the fly.
Conversations with your parents about their finances can happen naturally. But even if you are able to broach the topic casually, you should set a time to have a more in-depth discussion—or a series of discussions—with them to gather details about their finances. Ask them what a good time would be for them to sit down with you to have the conversation, then make a date to talk.
5. You can use a story to start the conversation.
One of the best ways to start a conversation with your parents about their finances is to use a story. Maybe you have a colleague who had to stop working to care for a parent with dementia. You could use that as a cautionary tale about what happens when you don’t have a plan for long-term care. Or maybe you have a friend whose parent died without a will and there were family fights over who got what as a result. This could open the door to discussions about the importance of estate planning.
If you don’t have your own story, borrow one. Talk about someone you read about in an article. Or make up a story. Don’t think of it as lying. Instead, think of it as a way to start an important conversation that needs to happen.
6. You need to be calm and respectful.
Knowing what not to say to your parents when talking about their finances is just as important as knowing what to say. Don’t be condescending, don’t appear to have selfish motives, don’t issue ultimatums and don’t use language such as “you should” that could put your parents on the defensive.
Make sure you show your parents respect and remain calm as you talk to them about their finances.
Remember, if it seems like you’re trying to be controlling or have selfish motives, your parents won’t want to talk with you. Instead, make sure you show your parents respect and remain calm as you talk to them about their finances.
7. You need to gather details about their finances.
If your parents are willing to have money talks with you, start by gathering basic details about their finances, such as whether they have a will, power of attorney, advance directive, and how they pay their bills. Then ask for more detailed information such as their sources of income as well as types of debt, investment accounts and insurance policies they have.
Be sure to take notes about their finances as you talk with them. Or you could ask your parents to write down information about their accounts for you, store it someplace safe and tell you how to access it if you ever need it to help them.
8. Make sure your parents have estate planning documents.
If your parents don’t have estate planning documents such as a will, power of attorney and advance directive, encourage them to meet with an attorney as soon as possible. It’s especially important that your parents draft and sign power of attorney and advance directive documents before they have any issues—such as a stroke, dementia or coma—that make them incompetent
These documents allow them to name someone to make financial and health care decisions for them if they are unable to do so themselves. If something were to happen to them and they didn’t have these documents, you or your siblings would likely have to go to court to be appointed their conservators or guardians to make financial and health care decisions for them.
9. Discuss long-term care planning with your parents.
During your money talks, find out whether your parents are counting on you to care for them. This will impact your finances because you might have to take time off work or even quit a job to provide that care. If possible, encourage your parents to look into long-term care insurance or meet with a financial planner to figure out if they can afford care on their own.
Your parents can find a long-term care insurance broker through the American Association for Long-Term Care website, www.aaltci.org, or by calling 818-597-3227. They can find a financial planner through the Financial Planning Association’s member directory at PlannerSearch.org or the National Association of Personal Financial Advisors’ directory at NAPFA.org.
10. Don’t get discouraged if your parents are reluctant to talk.
Your parents might not want to share details about their finances the first time you try to talk with them. They might change the subject. They might tell you that their finances are none of your business. But the truth is that their finances are your business if you ever have to step in and help your parents out—or deal with what they’ve left behind when they’re gone.
It could take several attempts before they understand why you want to discuss their finances with them and are willing to open up to you. It might even require a third party—such as a financial professional or trusted family friend—to help facilitate a conversation. Keep trying different approaches, and, hopefully, your parents will recognize how important it is to you to have this conversation.
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