We Need to Talk
Jonathan Clements | May 2, 2020
WE’RE IN THE MIDST of a bull market—in talking. Stuck at home with our families, we’re chatting more with each other, while also frequently touching base with friends and family whom we can’t see in person.
How about devoting some of these conversations to money?
I’m not going to claim that, if we had more frank discussions about money, it would solve all of our financial problems. I’ve seen enough damning data and heard enough horror stories to know that many folks will make huge blunders, no matter how much great financial advice they get. Still, I believe that more talking about money would be a plus, and that it should start with our families. Here are 17 financial conversations we ought to be having:
- Get everybody involved: If you just had your first child, talk to the grandparents about making a onetime or monthly contribution to a 529 college savings plan. They’ll never be more receptive to the idea.
- Have a discussion with your elementary school kids about how you make financial tradeoffs. Explain that the family spends, say, less on cable channels so there’s more money for vacations.
- Tell your middle schoolers what it was like when you first entered the workforce, including the financial struggles you had and what you did to save money. Are you Skyping with the grandchildren? Recounting the story of how you succeeded financially will likely be more powerful than any lecture you could deliver.
- Talk to your high school freshmen about how much there’s set aside for college costs—and what that means in terms of picking schools and taking on loans.
- Have occasional discussions with your high schoolers about how much you earn, where the money goes, how much you save and where you invest those dollars. Yes, they may be 17, but they aren’t too old for show and tell: Let your teenagers look at your paystub and at the statements from your bank, 401(k), brokerage firm, credit card company and mortgage company.
- Ask your spouse—and yourself—whether the two of you have the right spending priorities. Possible topics: What are your three favorite weekly discretionary expenses? Among larger potential expenditures in the years ahead, such as vacations, cars and remodeling projects, what are your priorities?
- A little humility helps: At dinner one evening, regale your children with stories of your biggest financial blunders.
- Fund a Roth IRA for your teenagers based on their earnings from babysitting, mowing lawns and elsewhere. Yes, you may have to heavily subsidize the funding of the account, but it’s worth it, because it’ll give you the chance to discuss the value of tax-free growth and long-run stock market compounding.
- With college costs coming up fast, have another talk with the grandparents about helping with tuition and other expenses.
- Get your college-bound kids a credit card—and detail the medieval torture they’ll suffer if they misuse it.
- Broach the topic of retirement with your spouse, but spend the time talking about your shared vision for those years. Where will you live and what will you do each day?
- Prod your adult children to send you the 401(k) plan information for their first job. Discuss the importance of contributing and which investment options they might choose.
- If you sense your adult children may stay put for seven years or more, raise the possibility of homeownership.
- Tell your parents what you’re doing to prepare for retirement, and then ask them about their own finances. You might casually toss up questions about how they plan to fund their retirement, when they’ll claim Social Security and how they might handle long-term-care costs.
- Ask your parents whether they have any special goals for their estate, such as charities they want to support or sums they’d like to earmark for the grandchildren. From there, you might check on the details of their estate plan, including whether they have powers of attorney so someone else can make financial and medical decisions on their behalf, should they become incapacitated.
- If you sense your parents are struggling to manage daily life, ask whether there’s anything you can do to help them maintain their independence. This may open the door to a conversation about downsizing or moving to senior housing. But tread carefully: As we grow older, we sense a loss of control—and we don’t want our adult children badgering us into surrendering even more autonomy.
- Remember those difficult conversations you had with your elderly parents? Eventually, you’ll need to have them with your children and other prospective caregivers. How would you like to handle the end of your life? In recent months, I’ve had a surprising number of questions from readers about assisted suicide, should their physical or mental health deteriorate badly. I don’t know much about the topic, but I have a lot of sympathy with the sentiment: None of us wants to spend our final years incapacitated, with little or no quality of life.
Do you know what’s great about these family conversations? They’ll help not just your parents and your children, but also you. As you describe what you’re doing financially, you’ll be compelled to think harder about how you manage your money—and that may prompt you to be a little more rational.
Follow Jonathan on Twitter and on Facebook. His most recent articles include Take It Away, Back to Basics and Growing Conviction.
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