Several times during the ongoing discussion of financial independence on this site, readers have asked about how they, as young and financially stable professionals, can help their parents who have given them so much. Parents are often very uncomfortable about such situations, as they view it as a reversal of the parent-child relationship that they have known for decades. How can this gap be bridged?
Here are fifteen tips for anyone who has reached complete financial independence and stability and is making sound financial choices, but wants to offer a helping hand to their parents to make sure that they are headed to a safe, secure, and happy retirement, fulfilling all of their dreams in lives that have given so much to others.
Clearly define what you want to accomplish with the talk. There has to be a purpose for a financial review; if you’re just fulfilling curiosity, then don’t bother. Do you want to go over their assets with them to help them define a will? Do you want to make sure they’re on a good path to retirement? Do you want to clarify what their plans are with regards to any long-term care they may eventually need? Are you actually worried about their day-to-day finances? Know what you want to talk about before you even start.
Give your parents some notice; don’t spring this on them. Call them up and schedule a partial or full day of their time and let them know that you want to talk about their finances with them. Let them know in as much detail what you would like to talk about. If they immediately object, you’re getting into a tricky area that relies on your personal relationship with your parents. The best course of action is to simply ask for the time and ask them to voice their objections then.
Schedule a large block of time for the talk, much longer than you might think it would take. If you’re thinking you can whip this out in an hour and then head off to play golf with your pals, then think again. You’re dealing with individuals with whom your relationship is complex and who also have a much longer and more complex financial situation than your own. Even more, you’re also dealing with individuals who have many more years’ worth of building up their own financial perspective. Give the conversation plenty of time to evolve and grow.
Schedule this talk in the place where they would have easiest access to their financial records. Most often, this is their home, so if you live far away from them, you may want to schedule the talk for a few hours in the middle of a longer visit to their home. When the questions get complicated, and they often will, it will be to everyone’s advantage to be near the location of detailed financial records.
Plan on bookending the talk with non-financial activities. By doing this, you are making the transition into a difficult subject much easier, you are not leaving with the taste of a difficult conversation on everyone’s lips. A nice lunch before the talk and a nice dinner after the talk is a great way to bookend things.
Bring plenty of tools that you’ll need, such as your laptop, plenty of scratch paper, and writing materials. This way, you can take notes, create diagrams and lists, and easily make any calculations that you might need to make. Have these on hand before you even begin the discussion, so that if you’re all following a train of thought, you don’t interrupt it while your mother hunts around in the kitchen for a pen while your father twiddles his thumbs.
Preface anything you say with love; tell your parents that you love them in the most honest and sincere way you can. This is probably the most important piece of advice that I can give to you. Your parents are almost always going to be apprehensive about this kind of discussion, but you can break through this apprehension with a genuine admission of love for your parents and all that they have done for you. You don’t need to prepare anything, just look at them, think about the countless things they’ve done to help you, and say whatever comes out.
Make the purpose of this talk very clear to your parents, so they know why you are asking questions about their finances. Make the goals of the conversation clear to them, and also let them know why you care about it. Again, voice this in your own words, in the frame of your own relationship with your parents.
Ask lots of questions, and listen carefully to the answers. Get as much detail as they can provide about anything that might be relevant to the conclusions you want to draw. Take notes if they are useful to you. Also, if they ask questions, be as open as possible with them, because they’re trying to do the same for you.
If things turn confrontational, back off. If you start hitting upon raw nerves during this process, remember that it’s not worth damaging your relationship by continuing to press the issue and perhaps starting an argument. Instead, let the point slide and move onto something else. If the piece of information is vital, continue with other topics, but try to continue to make it clear why that piece of data is important.
Whenever you do a calculation, walk through every step of it with them. Many people are very uncomfortable with numbers and prefer to just let their banker or their accountant handle all of it. If you do a calculation, explain every single step to them, even if you’re worried it might be insulting to them. You might be surprised at the discussion points it generates.
If they want you to walk them through a scenario, even if you don’t agree with it, go through it. Quite often, people who are unfamiliar with personal finance are quite interested to see how the numbers come out just so they can grasp the situation better. You can explain why the numbers aren’t realistic, but you should take the time to run through anything that they ask about.
Give them options with benefits and drawbacks. Don’t simply tell them what to do; instead, present some different options to them to give them something to think about. If they ask for your advice, be willing to give it, of course, but don’t simply hand them a solution and tell them that this is the answer.
Even if you’ve figured out the numbers, don’t forget about a will, a living will, and a trust. If you find yourself in such a frank discussion with your parents, don’t forget to discuss their will, trust, and living will. Make sure you understand them at least a bit, but you should likely advise them to get a lawyer to do the actual paperwork. You can (and should) walk them through many of the considerations, however.
End the conversation the same way you started it, with a show of love and thanks for their openness and trust. Give them both a hug and thank them for being open with their finances, especially if the conclusion is not as happy as you might have hoped. Just because their finances aren’t stellar doesn’t impact your relationship with them – or at least it shouldn’t.