Helping family members with their personal finances is the epitome of a sticky wicket. There are typically two intervention points. The first is stepping in ahead of situations before they cause serious financial problems, and the other is helping them manage themselves out of problems after they occur.
Regardless of when you initiate the conversation, doing so may not be easy.
Personal finances tend to be highly sensitive because they can reveal emotional struggles or reflect long-held taboos about openly discussing money. Getting meaningful insight into your parents’ or children’s finances, whether or not you see evidence they may be facing difficulties at the moment, has its challenges.
We’ve recently seen these situations when establishing an open line of family communication early on would have been beneficial.
- A current client (a woman in her mid-80s) has virtually run out of money. Her daughter, loving and involved in many aspects of her mother’s life, was shocked and scared when she learned this news.
- A former client (a woman in her mid-20s) had accumulated worrisome credit card debt. She was humiliated by the idea of revealing this to her parents until she finally had to because she could no longer juggle her finances.
Talking and Listening
In this article, we look at approaches to opening a dialog.
The first is about probing, so you can get out in front of emerging issues.
The second is about recognizing and reading the signs that trouble has arrived, then opening those conversations as comfortably and productively as possible.
Probing without Prying
The initial goal of probing is to create comfort. Then, as the conversation opens up, your probes can become more personal and specific. While there is no one-size-fits-all set of questions, your initial inquiries may be more comfortable in the form of a dialogue that starts with asking advice.
Often, a parent or child may not appear to be having trouble. They may seem to be living comfortably, not mentioning any financial worries. So, you may not be aware that savings are being depleted or that debt has accumulated until you suddenly realize they are struggling to make ends meet. Being aware of signs that your parents or adult children may be in trouble will allow you to help them mitigate or avoid long-term consequences.
For seniors, signs of financial difficulties may be hard to spot.
Look for the following clues to help you see if a senior is at risk for lapsed health and other insurance coverage, missed funds transfers and retirement distributions, a utility shut-off, or even eviction.
- Lapsed organizational skills evidenced by a build-up of mail and papers or arithmetic errors and incorrect date sequences in checkbook registers
- Overlooked/unpaid bills
- Overdrawn checks due to lack of attention to account funding
- Failure to take IRA minimum distributions resulting in tax penalties and interest
- Unfiled taxes and notices of tax penalties
- Changes in patterns of cash withdrawals
- An increase in the number and amounts of online charitable donations
For Millennials and Gen Zs, the clues are sometimes obvious.
You may see signs that they are living beyond their income – expensive cars, pricey housing, and elaborate vacations. They may be struggling with student and credit card debt and, faced with an uncertain job market, may have a lack of regular work or seem to be bouncing from job to job. These predicaments can result in short-term financial urgencies which can create overwhelming anxiety – another indicator of their need for help.
While there are many other indications and signs, the trick is to start connecting the dots. When you feel they could use your support and guidance to regain control and manage their way out, the first conversation you want to have involves assessing the situation. When you want to open a dialogue, you can start with a personal context of yours, and ask for advice or perspective. Then you may be able to move deeper into the issues. Remember, you’re doing recon, not solving problems quite yet.
These conversation openers may help in getting either age group to reveal their difficulties or need for help:
I am working on my estate plans and retirement funding. I’ve been hearing from friends how much their parents are spending on home health aides – like $200,000 a year. I’m worried I won’t be able to afford that help if I need it. Have you learned anything in your planning that you think could me?
I remember my first BMW. I loved that car, which is why I still buy them. I guess I’ll never get used to how much they actually cost to own. How’s your car doing? Have your insurance and maintenance costs been manageable?
What a roller coaster my portfolio has been on this year. Thinking about 2021, I’m talking with my financial advisor about some strategies to protect me from volatility. Are you hearing any investment strategies that you’re considering?
The news is full of stories about how difficult it is for young people to save because so much of their earnings go to paying for housing, medical insurance, and student loans. I feel like those things took a smaller share of my salary when I was your age. What advice do you give your friends when you discuss finances?
The need and desire to intervene should always come from a good place. Probing requires the most important skill you can bring to the table — the ability to listen and help make the conversation as comfortable as possible. This will help you be aware of what might be coming, and how you might help.
Sometimes, the best source of personal finance management help comes from the outside.
Know that the advisors at Eddy & Schein Group approach these discussions in similar ways in the context of these very real sensibilities. We’re here to help, and we can help you keep family relationships healthy and caring.
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