How to Have the “Money Talk” With Your Parents

Money is an emotional topic – that’s why many families aren’t comfortable sharing information with each other about their finances. However, it’s never too early to start talking to your parents about their money situation. That’s because failing to understand their finances could have unpleasant – maybe even dire — consequences down the road.

For some, the COVID-19 pandemic became the pivot point for talking about money. The 13th annual Parents, Kids & Money Survey by T. Rowe Price showed that as families experienced pandemic-related financial issues, such as job losses or furloughs, they began having more money conversations. The study found that 43% of parents and 44% of children reported an increase in these types of conversations over the past year.

While many parents would prefer not to burden their adult children with talk of their personal finances, it’s important for children to understand their parents’ plans – especially if Mom and Dad are nearing retirement or are elderly and in declining health. Where health is an issue, parents may see a money conversation as threatening, because they fear losing their independence or being placed in a nursing home.

If you suspect your parents are hesitant or unwilling to talk about their financial situation, it may be helpful to try a less direct approach toward having this crucial conversation. Here are a few tips to get you started:

1. If possible, start talking with your parents about their future plans while they’re still healthy, both mentally and physically. Unfortunately, waiting until a problem surfaces places you in crisis mode from the very beginning. In my experience, it’s easier to start when people are feeling relaxed and in a good mood.
2. Don’t have a money conversation during the holidays. Holidays can be stressful on their own, so wait until a calmer time. If that’s the only time you’ll be face to face, wait until well after any festivities are finished.
3. Start the discussion by asking about your parents’ estate plan. If you sense your parents might be touchy about a money discussion, you can ask if they have an estate plan to protect them if they have medical issues in the future. You can specifically let them know if you are willing and able to serve as their power of attorney. This may provide an opportunity to ease into other aspects of their future plans.
4. In terms of finances, let your parents know you would like to help ensure they have the resources they need in the future. Instead of asking specific questions about their finances, you could encourage them to seek a courtesy second opinion from a financial advisor. This would allow your parents to maintain their privacy, but could also provide you with some peace of mind.
5. If your efforts don’t work the first time, keep trying. You may feel discouraged if your parents quickly change the subject or tell you not to worry about it. Simply reassure them that you would like to help carry out their wishes and want to understand the best way to help. Offer to help them organize their financial files so they can find them in an emergency, or ask them how their friends are planning for the future.

Ultimately, you may wind up having several mini conversations about different aspects of your parents’ situation, including their health care plans and estate plans. Whenever they do discuss their wishes with you, however, be sure to make notes of your conversation so you can remember it accurately.

Finally, if you are a parent of adult children, don’t be afraid to initiate the conversation yourself. While it may seem difficult to discuss at first, chances are you’ll feel much better knowing your kids understand and support your plans.

Tracy S. Beard Financial Advisor CFP®, AIF®, MSFS

Tracy has been involved in the financial services industry since 1998. He has a membership interest in Savant and earned a master of science degree in financial services from The American College in Bryn Maw, PA.