Ask A Financial Therapist: How To Talk To Your Parents About Money
The Hang-up: My parents and I have never talked about money before, so I'm not sure of their financial situation. They're getting older, and I think it's a conversation that we should have, just so I'm prepared. What do I do?
Of course, this is a hard subject to breach. Even at its most basic level—finances—it's a difficult conversation, since we know that money can bring up feelings of anxiety for most people. But on top of that, it involves facing some hard realities that most of us would probably like to avoid.
And as we know from research about the "sandwich generation," or people who take care of their aging parents and a child, this is a major issue for many Americans: 45% of adults say they support both their parents and children, and 15% have contributed financially to both their parents and children within the same year. And of this group who are supporting both generations of family, only 28% say they are "living comfortably" with the overwhelming majority (60%) say they only "meet basic expenses" or "meet basic expenses with a little over." But one of the most important things you can do is to start the conversation well before you need to start carrying any financial burden.
"Learning to have any new financial conversation involves learning new skills, especially when there is so much emotion attached to the conversation," says financial therapist Bari Tessler. "The first thing you can do is to check in with yourself before you even start: Do a body check; evaluate where your anxiety levels are at; see where your mind is. It's an important tool where you're telling yourself, 'I'm approaching a hard conversation, and I'm going to support myself emotionally along the way.'"
Also: Plan for multiple conversations, and start slow. "Don't go into it with five questions to ask right away that will be overwhelming for both of you," she says. Then, make the conversation more about a joint effort. "Say something like, 'Hey, I'm starting to read more about personal finance, and I have a few questions if you are open to it.'"
In the first conversation, Tessler says you don't need to get to numbers yet. "I get there, but never right away," she says. "Start with memories around money, stories around money, and ask them what it was like growing up or raising you with money."
Then you can move into financial values, she says, which are the things they value enough to spend money on. For example, if they are nearing retirement, what do they want to do with their savings? From values, you can eventually move on to more of the logistics, like bookkeeping. Get all of that information you need: Do they have life insurance; what are their bank accounts and passwords; do they have any investments you need to know about? "Get all of this information down in one place," Tessler says. "This is very important work. And for some people, it's easy, and their parents have it all organized already. For others, it will take some gentle pushing."
And, as always, be mindful of the emotions that your parents might be going through. "They might be feeling shame or guilt that they don't have this all together—any time you initiate a new money conversation with someone, they are going to have their own emotional relationship with it and will be bringing that to the conversation. It's sensitive stuff for all of us."
Finally, get on the same page. Depending on your parents' situation, maybe you realize you'll need to prepare to help them financially in the future. Or maybe they have enough to live comfortably come retirement. Regardless, both parties need to be aware just in case something happens. "If it becomes too complicated, reach out to a financial planner who specializes in elder care to help the situation," she says.
She notes that the pace of the conversation really just depends on your relationship with your parents. If it's over the course of a few, make sure your conversations are happening when you are both ready and willing. "Say, 'I have a question about money, is now a good time?" which gives them the option to opt out—perhaps they are already in an anxious mood and a conversation about finances will only escalate it.
And always go back to that body check-in, she says. "I also recommend that people do a check-in during the conversations—you don't have to alert your parents to what you are doing, but just a quick breath check in the middle of the conversation to make sure you are feeling OK," she says. "And then certainly after, so you can think about what went well, what can you do differently, what do you still need to talk about going forward. Having that framework can be very important."