This article was originally posted by NAIFA partner Carefull. Carefull is the first service built to organize and protect older adults' finances. It is available for individuals, families and financial advisors who need smart financial monitoring, identity theft protection, and bill oversight for older adults' daily money matters.
Timing is really important when it comes to talking to your parents about their finances. The holidays might seem like the perfect opportunity to have these conversations because you, your siblings and parents will be together in one place (that is, when there’s not a pandemic making gatherings a challenge). You’ll be celebrating, and everyone will be relaxed. Perfect time for a family money talk, right?
Wrong. A holiday meal is not the ideal time to talk to your parents about their finances. Your efforts to discuss what could be an awkward topic could easily backfire. So before you say, “Mom and Dad, pass the turkey and let’s talk about your will,” consider the cons of trying to start this conversation during the holidays.
3 reasons not to mix money talks with holiday meals
To be clear, it is imperative to have family money talks. The sooner you can gather details about your parents’ finances, the more prepared you’ll be if an emergency pops up and you have to help them with money matters. However, there are three key reasons why it’s better to wait until after the holiday meal to—forgive the pun—talk turkey.
Holiday gatherings can be stressful. Talking about money also can be stressful. So if your family’s holidays look more like a scene out of “National Lampoon’s Christmas Vacation” than a Norman Rockwell painting, the last thing you want to do is start talking about money to turn up the tension.
There could be people there who don’t need to be a part of the conversation. Your holiday meals might bring together aunts, uncles, cousins, grandchildren and even family friends. As concerned as these people might be about your parents’ financial well-being, they probably don’t want to be dragged into a conversation about money at the dinner table. More importantly, your parents shouldn’t be put on the spot to share details about their finances in front of a crowd.
Adding alcohol to the mix could spell disaster. Don’t assume that your parents might warm to the idea of discussing their finances after a few drinks. In fact, if someone has had too much wine during the holiday meal, the conversation could go downhill real fast.
When to talk to your parents about their finances
Ideally, you and your siblings should talk before having a conversation with your parents. All of you should get on the same page about who will initiate the conversation with your parents and when to do it.
Don’t assume that your parents might warm to the idea of discussing their finances after a few drinks. In fact, if someone has had too much wine during the holiday meal, the conversation could go downhill real fast.
Agree with your siblings that you’ll at least wait until the day after a holiday meal to talk to your parents. Even then, you should simply suggest to your parents that you want to talk to them about their finances. Ask them when a good time would be for them to sit down with you and have a discussion. Letting your parents make this decision will allow them to maintain a sense of control—and that will go a long way toward making them feel more comfortable about having the conversation.
5 ways to start the conversation
There are several tried-and-true conversation starters you can use to get your parents to open up to you about their finances. Be aware that you might have to try more than one approach. Also, keep in mind that talking to your parents about their finances isn’t just a one-time conversation. It should be a continuing dialogue.
- Use a direct approach: There’s no need to beat around the bush if you have a good relationship with your parents and they don’t think of money as a taboo topic. Simply let them know you’d like to find out some information about their finances to give you peace of mind.
- Don’t make the conversation about money: If you know your parents don’t like discussing money matters, ask them instead about big-picture topics—such as their plans for retirement or their wishes. You could let them know that because they took care of you that you want to be able to provide the same sort of care if they ever need it.
- Talk about your own financial planning experience: If you recently had a will or other estate planning documents such as a power of attorney drafted, you could tell your parents where you’ve stored your documents. Then you could ask whether your parents have similar documents and, if so, where they are located.
- Ask about “what if” scenarios: Let your parents know that you want to be prepared to help them in case of an emergency. Then ask if they could share information about, say, how they pay their bills so you can make sure they’re covered if something happens.
- Ask for advice: You can avoid making your parents feel like there’s a role reversal by asking them to give you advice about a financial matter. The goal is to get them to share what financial planning steps they’ve taken as they tell you what to do.
Regardless of the approach you use, make sure you remain calm and respectful when talking with your parents. After all, the goal in having these conversations is to gather information before an emergency strikes so emotions don’t get in the way.
What information you should gather
If your parents are willing to share information about their finances with you, gather as many details as possible. This will help you be prepared if you have to help them with money matters as they age. Make sure you ask about the following:
Do they have estate planning documents—a will or trust, power of attorney and advance health care directive? These legal documents must be drafted and signed while your parents are of sound mind. So they need to be in place before a health emergency strikes.
How do they pay their bills? You want to find out whether your parents use automatic bill pay or write checks every month. This information will come in handy if, say, they end up in the hospital and need help paying bills. Also find out what bills need to be paid each month.
You can avoid making your parents feel like there’s a role reversal by asking them to give you advice about a financial matter.
What sources of income do they have? Find out if they receive payments by check, direct deposit or by self-directed withdrawals in the case of retirement savings.
What sort of financial accounts do they have? Find out where your parents bank, if they have both checking and savings accounts, and how to access those accounts. You’ll also need to know whether they have investment accounts.
What types of debt do they owe? Do your parents have a mortgage, auto loan, personal loan, business loan, credit card debt or medical debt?
What types of insurance policies do they have? Find out which companies issued the policies, where the policies are located and how the premiums are paid.
You’ll also need to know your parent’s Social Security number, Medicare or Medicaid number, driver’s license number, military ID and other personal information. Store this information in a safe place that can only be accessed by you or others authorized to see it.
For more on what you need to know about your parents’ finances, see our guide on financial caregiving.
