Money is one of the biggest sources of stress and disagreements in families. The fact that talking about money is avoided by many doesn’t help the situation. There are several reasons why we find talking about money, even with our nearest and dearest, awkward.
First, money isn’t just about the money itself. An individual’s or family’s financial status becomes intimately linked with their identity. Financial status is often used to subconsciously judge success, meaningfulness, intelligence, beauty and trustworthiness. Money becomes not merely about the value of things, but the value of the people who possess it.
The value judgement associated with money creates plenty of social and psychological associations. For example, losing money can mean losing status, friends, respect, our place in society and even our identity. Talking about money with a person who has less of it than you do might come off as judgmental or a show-off and sour the relationship.
To further compound the situation, there seems to be no agreed upon standard for financial well-being. For example, when talking about weight and health you can talk about BMI and other metrics. There aren’t similar metrics to govern expectations regarding money.
Due to these reasons, most of us keep mum about money even with our families, until there are big issues to address. For example, you might have to talk with siblings about financially supporting your aging parents or a special needs sibling. By then, we are not really equipped with the rules of engagement on how to effectively discuss money matters with our loved ones.
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Here are some tips to make money talks with your family a little less awkward and a lot more effective:
Make a real meeting
Should you introduce the topic of your aging parents financial care at the Christmas dinner table? That isn’t such a great idea. Holidays are already stressful and surprise money discussions are more likely to be ineffective.
Set a date and time to discuss with the relevant family members. Have a clear agenda for the meeting to keep the conversation from veering off into unrelated family issues and drama.
A proper meeting gives each member time to think about their contribution to the discussion. If you don’t live in the same town or are worried about Covid-19, you can use platforms such as Zoom or Skype for a virtual meeting.
To guide what is discussed during the meeting, outline the key conversation points. Have one family member write down what is discussed and share it with the rest of the team.
Make money meetings with your family a regular thing – don’t just leave it until there’s a crisis.
Cover important topics
Talking about money isn’t easy for most people. You might find yourself addressing the easy topics as you avoid delving deep into really difficult ones. For instance, it might be harder to talk about getting health insurance than addressing a gambling habit.
But for your family money discussions to be truly successful, you should delve into the difficult money-related issues. Your discussions should cover everything from spending, long-term savings and investments.
Use the soft sell
If your parents, siblings, or spouse dislike talking about money, you can try the soft sell approach to make your point.
This is especially advisable for situations that call for more autonomy. For example, you might want to point out to a sibling that they should be more responsible with their money.
Nobody likes being lectured, especially about their money. The soft sell approach allows you to get your point across without coming across as condescending and judgmental.
For example, you can suggest that they read a financial book that you enjoyed and explain how it has helped you manage your money better. You can even go a step further and gift them the book.
Unless they ask questions or seem genuinely interested in the conversation, this should be a quick and painless discussion.
While discussing money matters with family members, whether your elderly parents or siblings, it is important to be sensitive about each person’s life circumstances. For example, aging parents might be sensitive about their loss of financial independence. Similarly, a sibling with young children might be financially strained.
Try as much as possible to frame the conversations with each person’s situation in mind. In the case of aging parents, you can maximise their decision-making power in their financial matters.
Involve a third party
You might feel unprepared to tackle some topics without involving a professional third party. Topics such as health or life insurance and retirement investing might be best explained by a professional. This also provides a neutral setting to have the discussion.
In some situations, you don’t even have to be involved in the discussion. You can direct the family member to meet with the professional and update you on their progress.
The best time to start discussing money with your family was yesterday, the second best time is today.
Don’t let financial issues due to lack of communication about them become a source of stress for your family. Acknowledge the fact that money conversations might be awkward and stir up pent up emotions in individuals.
Making a start is the hard part – when you make money conversations a regular thing with your family, it becomes easier. Ultimately, families that sit together and have honest money discussions can plan together and ensure that everyone in every generation is appropriately supported.