By Australian Catholic Superannuation
There are few subjects as difficult and awkward to discuss with your family as money. At a time when more adults are in the position of needing to provide support for both children and ageing parents, it’s important to talk about finances with your loved ones.
When talking about money, we should acknowledge our emotions but not let them take over the conversation. Here are some ways that you can approach a financial discussion with members of your family in practical and useful ways.
Reviewing your finances with your partner
It’s important that you have a good understanding of your own financial position, strategies and philosophies before you engage with your kids or parents.
When seeking financial advice, one of the first things to work through with your planner is your goals. No matter if your plan is to buy a house, retire comfortably or get out of debt sooner, your map to success will be guided by the outcome you want.
There’s no bad time to get financial advice. However, it can be particularly useful during times of significant change like having a child or dealing with the affairs of an ageing parent. The value of financial advice comes from creating a rigorous plan to achieve your goals, an experience that you can share with your family.
Talking money with your ageing parents
Your parents have been your financial touchstone and so talking to them about their financial situation may seem intrusive. Going in with a plan for what you want to discuss and using a considerate tone can help break the tension that is inherent when talking about money.
Giving life advice to the people who raised you can be tricky. Ray Smith, WA Senior Relationship Officer says, “Be gentle and, instead of picking at their mistakes, guide them with information to ensure sure the conversation is about what they want or need.”
This is about making a plan that respects your parents’ wishes, addressing fears around a loss of independence or control. This discussion is best before something like a medical emergency leaves you scrambling. Creating a plan can bring a sense of security to everyone involved.
Ease into the conversation by discussing how you reviewed your own finances, like going over your insurance needs, refinanced your mortgage or worked with a financial planner.
A conversation about the broader economy can transition into a discussion about how investments are performing in their super or pension accounts. Ask them about their investment preferences and performances. Their answers could help you anticipate potential opportunities or trouble spots that you could work together to address.
Conversations with kids: How many super accounts are too many super accounts?
Once your kids are old enough to be in the workforce, they’ve learned a lot about budgeting and finances from you already. How you handle money can have a significant influence on how your children behave with their own.
Lecturing your kids on being responsible with money is nowhere near as effective as being a good role model during their formative years. WA Regional Manager Jon Cheney says patience is important, “Lasting retirement wealth is built over time and not overnight.”
Once your child has been in the workforce, take some time to review the number of superannuation accounts they hold. By helping your kids understand the fees and investment performance of each account, you can demonstrate how taking small steps, like combining funds to reduce fees and selecting appropriate investments, can pay significant dividends later in life.
Meaningful conversations with children aren’t about how much you have but about what you want to be able to do with money over the longer term.
What you need to know about the family finance talk
Ultimately, no matter who you’re discussing money with, you need to keep the tone positive. A gloomy conversation can add unnecessary stresses and strains to your relationship.
While only you are in charge of your financial future, having regular, meaningful conversations with your family can mean better outcomes for your loved ones.
Any advice contained in this document is of a general nature only and does not take into account your personal objectives, financial situation or needs. Prior to acting on any information in this document, you need to take into account your own financial circumstances, consider the Product Disclosure Statement for any product you are considering, and seek financial advice if you are unsure of what action to take. Financial advice is available to members through an arrangement with Industry Fund Services Pty Ltd (AFSL 232514). Call us on 1300 658 776. Any views, opinions or recommendations of the writer are solely their own and do not in any way reflect the views, opinions and recommendations of Australian Catholic Superannuation. The views, opinions or recommendations in the article may change in the future.
From pages from 16 to 17 Issue 9: ‘What is a Vocation?’ of The Record Magazine