Managing your own finances can be tough enough as it is. Talking about finances with your parents can seem overwhelming. But it’s smart to start the discussion early, before illness or other circumstances force you to step in.
It’s never easy to talk about money with anyone you love. However, getting to know your parents’ financial plans is essential. Their plans may impact yours as you juggle your career, raising children, and planning for your own retirement.
According to a 2013 survey by the National Endowment for Financial Education, 7 out of 10 adults say there are “major barriers” in discussing finances with aging family members. That survey reports that in 47% of families with a loved one experiencing mental aging issues, that loved one has had trouble paying bills on time. 36% of those loved ones have had trouble with simple math, and 21% have gone through their savings accounts.
These days, Americans are living longer, and nobody wants to be a burden to their loved ones. Talking to your parents now can put you and them at ease. Solid financial plans will help them preserve their legacy and the results of their lifetime of work.
Here are some tips to help you make the discussion with your parents as comfortable as possible.
1. Reassure them that you’re not trying to take over their finances. Your parents are adults and they are used to being in control. You are there to help, not to make decisions for them.
2. Get help if you can. Recruit your siblings or talk to someone else you and your parents trust, like a lawyer or a financial planner.
3. Show your parents you have your own plans in order. Do you have a will, a power of attorney, and a health care directive? Start the conversation by telling your parents you had these important documents done. That can make it easier to ask them about theirs.
4. Use examples. Do you know someone who struggled with trying to sort out their parents’ finances after one or both became incapable of making decisions? An example can be a powerful tool to illustrate the need for planning.
5. Start simply. Offer to help organize your parents’ bills and insurance paperwork. Chances are they’ll appreciate an extra pair of eyes on their phone or cable bill.
The most important thing is to make sure your parents are comfortable with their plans and with the help you are offering them. Keep the conversation light and avoid acting like you know more about finances than they do.
Once the conversation is started, it will be easier to work on details. Make a list of contacts like your parents’ doctors, lawyers, and tax preparers so that you will know whom to contact for paperwork and information.
Lastly, talk to your parents about their bank accounts, insurance policies, and estate plans. As difficult as talking about these topics can be, you—and your parents—can respect each other through the process and even strengthen your relationship as a result.
This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.