Your parents are most likely the people who you learned financial literacy from so it might feel weird to think about leading the conversation about money. As your parent's age, they may need help managing their finances. While you don’t want them to think that you believe they don’t know what they’re doing, you want to make sure that they have prepared for their future. Keep reading for tips on how to talk to your parents about their finances.
1. Do Your Homework Prior To Having The Conversation
You want to have a list of all the different points you want to touch on in your conversation. If you don’t come in prepared and give the conversation some direction, it’ll be easy to derail and get off track. A few topics you might want to touch on are:
- Estate planning
- Overall debt
- Retirement savings
- Life insurance
- Health insurance
- Knowledge about scams geared toward aging people
Once you have your list, schedule a time with your parents to sit down and have this conversation. Instead of dancing around the subject, be honest with your parents that you want to talk about their finances. Reiterate that you only want what is best for their future and want to make sure that everything is taken care of properly.
2. Be Direct But Kind
While this is a serious conversation where you need honest answers, you do not want to make your parents feel like they are backed into a corner. Be sure to be welcoming and understanding so they can see that you are coming from a place of care. Your parents are more likely to be receptive, even if they are uncomfortable about the topic of finances when you emphasize that you want to make sure they are in a good spot financially and are prepared for their future.
3. Ask About Hypotheticals
Providing a hypothetical scenario can make your parents think about what they would do in different situations. A few scenarios could be:
- What would happen if both of you ended up in the hospital?
- What would happen if one of you passed away?
- What would happen if one of you needed around-the-clock care?
These questions will bring up their estate planning, retirement planning, health insurance, long-term care insurance, and more. From these scenarios, they can decide what they want to happen if these hypotheticals were to become a reality.
4. Ask For Their Advice
After all, they are your parents. They have spent their life raising you so they must have some wisdom to pass on. Asking for advice is also a great way to open the conversation if your parents seem uncomfortable. A few advice questions you can ask are:
- If you could do something different with your finances, what would it be?
- What is the biggest financial risk you took and how did it play out?
- What is your most valuable tip about money and why?
Through these questions, you may also be able to get answers to the other questions you have about your parents’ finances. From this, you can then expand on those topics.
5. Offer To Help Them
If the conversation about money has resulted in many unanswered questions for your parents, it can make them feel overwhelmed. Instead of them now having to face this financial planning on their own, offer to help. This will also allow you to have more insight into their real financial situation. You do not have to take on the role of their financial advisor, but your parents may feel more at ease if they have you in their corner.
While conversations about money and finances are never fun, they are extremely important to have. If you or your parents need assistance creating a financial plan, Plan A Wealth Management can help. Our advisors will be able to walk you both through the process of building a financial plan and make sure that your parents will be taken care of in retirement. Give us a call today to get started.