Money Talks You Should Have with Your Family This Holiday Season
While the holiday season is full of cheer and celebration, it can also be an opportunity to have meaningful conversations about money. Talking about finances can feel awkward, especially during the festive season. However, it is essential to ensure everyone is on the same page when it comes to your individual and joint financial goals and plans. Holidays bring loved ones together, which makes it the perfect time to discuss your financial aspirations, concerns, and even doubts as a family.
This article will explore five key money topics to discuss with your loved ones to ensure you are all on the same page when it comes to financial planning for the family. You can consider hiring a financial advisor to make these conversations smoother and more productive.
Table of Contents
Below are five family-proof financial topics for holidays you should discuss with your family:
1.Talking about your individual and joint financial goals and struggles as a couple
Couples manage joint expenses and plan for future goals together, which makes it essential for them to discuss money openly and honestly. This holiday season, you can start by reviewing your individual financial situations. Take the time to download your bank and investment account statements, go through your spending habits, and assess where you stand with your savings and investments. This can help you both gain insight into your financial behaviors and identify any areas that need attention. For example, if one partner is saving more, while the other has built more debt through credit cards during the year, you may need to open up a discussion on how to better balance your budgets going forward.
In addition to reviewing personal finances, it is also crucial to discuss your common goals. Spouses may be working toward shared goals like buying a home, eliminating debt, saving for their children’s education, or planning for retirement. You can check your bank statement and investments to assess how both of you have contributed to these goals over the past year. You can also look at your joint expenses to find out how you have split them. Check if both of you are contributing equally to savings or investments or if one person is carrying a heavier load. You must also assess if that feels fair to both of you. In many cases, spouses do not earn the same income, which may lead one person to feel more responsible for contributing to their financial needs.
Apart from your savings and expenses, reviewing your investments is also important. Take the time to analyze whether your portfolios are sufficiently diversified, not only as individuals but also as a couple. Compare the stocks, bonds, or funds each of you holds. You do not want to end up with the same investment twice, leaving you both exposed to the same risks. Diversification can help you balance potential losses and increase the security of your financial future. If you have not already, consider discussing the possibility of adding different assets to your portfolios to spread out risk.
Once you have reviewed the past year’s financial statements, you can make informed decisions about your future family financial planning. Identify the things that are working well so you can continue doing those in the future. At the same time, pay attention to what needs adjustment. You can adjust your budgets, savings strategies, and investment plans accordingly.
2. Asking parents if they can afford retirement or require financial help
Asking your parents about their financial situation, especially in retirement, is an important conversation that could help both you and your parents plan for the future. Many parents may not have saved enough to sustain themselves for the long term. If they have helped you with education bills or student loans, it is possible that their retirement savings are lower than expected. In these cases, it is essential to check in with them to assess their financial situation and determine if they might need assistance.
Parents may face financial strain if their retirement funds are running out sooner than anticipated, particularly if they did not plan adequately. Healthcare expenses, for instance, can drain their savings quickly, especially if they have chronic health conditions or unexpected medical needs. It is common for healthcare costs, including prescription medications and regular health check-ups, to exceed what was initially planned for. If they have not factored these costs into their retirement strategy, you may need to step in to help. Long-term care can be another primary concern. Many parents may not have enough saved for nursing homes or assisted living facilities, which are often costly. Some may also prefer to stay in their own homes rather than move into a care facility, but this can require you to provide care at home, whether it is in their house or yours. Taking on this responsibility can have a significant impact on your own life, including changes to your life and finances. Moving closer to them might become necessary to offer the care they need, but it may force you to quit your job or sell your home to move closer to them.
Discussing these sensitive topics with your parents ensures you are prepared for what lies ahead. It is essential to understand their situation, especially as they age, so you can make decisions about how to help them without disrupting your own financial plans. Since holidays may be the time when you visit them, addressing these issues now can offer you the time to plan ahead and make the best choices for everyone involved.
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3. Discussing a will and estate plan with other family members
Discussing a will and estate plan with family members may seem the most taboo topic to discuss during holidays. Estate planning can feel like a morbid topic during the holiday season. However, there is no better time to have these conversations when your family is gathered together. Estate planning is crucial to ensure your wishes are clear and that your loved ones are well-informed about what to expect. Having an open discussion about your will can prevent misunderstandings and ensure that everyone understands your decisions. This can help to avoid potential disputes later on.
You can start by discussing any trusts, powers of attorney, and health directives you may have in place. It is essential to explain why you have set up certain arrangements, mainly if there are specific reasons behind leaving trust funds. For instance, some parents set up trusts for particular purposes, like funding a business expansion or paying for education. However, your children may have different views on how the money should be used. Listen to their perspectives to ensure you are making decisions that align with their needs and that avoid conflict in the future. If your family includes stepchildren, ex-spouses, or multiple biological and adopted children from different marriages, it becomes even more critical to make sure that everyone understands who will inherit what. Be transparent about your intentions to prevent confusion and feuds among family members later on.
Health directives are another important aspect of estate planning. Discussing your healthcare wishes with your family, particularly if you have specific instructions for palliative or hospice care in the future, ensures that your loved ones will understand your desires and will be able to act accordingly should the need arise. Open communication about these matters can also provide peace of mind for both you and your family. If you own a family business, discussing business succession is equally important, especially if you are planning to retire or step back from your role. Discuss what is best for the company while keeping in mind the desires of your children or other family members. Having a frank conversation about the future of the business can help keep things running smoothly and ensure that everyone is on the same page.
While these conversations may be challenging, they are also essential to ensure peace in the family. Open discussions can help the estate owner make informed decisions and reduce the chances of disputes.
4. Discussing your financial situation with your kids and understanding their needs
Discussing family financial planning with your children, especially if they are teens or older, is essential to help them understand financial responsibility and prepare for their own futures. It is also an excellent opportunity to share your financial goals, expectations, and the realities of your current situation.
If you have teens, the holidays can be an excellent time to talk about their future plans, including education and life goals. Discuss the possibility of student loans, financial aid, and the money they can save through part-time jobs, so you have a clearer picture of how much you need to save to support their education. Many children today are rethinking the traditional path of attending college. With the rise of alternative education options like online learning platforms and a growing emphasis on practical experience over degrees, some teens may decide that college is not the right option for them. This decision can significantly impact your financial strategy, especially if you have been saving for college tuition through accounts like 529 plans. It is important to have an open conversation about their goals. You may need to adjust your savings plans to support these new paths. It is also an opportunity to help your children understand the importance of budgeting and saving. If taught early, this can benefit them greatly in life later, helping them plan for their education, career, or future financial responsibilities.
For older children, your family financial planning discussions should focus on their current needs and whether they expect financial support from you. If they are financially independent but may need assistance in the future, it is essential to clarify and understand their expectations now. On the other hand, if you are nearing retirement or are already retired and relying on them for help, you need to let them know about your situation. Openly discussing any concerns about becoming financially dependent on them will ensure that they are prepared, both emotionally and financially.
Another essential conversation revolves around making sure your children, both minors and adults, know where to find important financial documents, such as your will, insurance policies, and other financial accounts. This is particularly important in the event of an emergency or your absence. They should be aware of where these documents are kept and how to access them, so they are not left scrambling in a stressful situation.
5. Discussing future plans that can affect your family
Discussing individual future plans that could also affect other members of your family is an important conversation to have. For instance, if you are planning to move to another city, this could have far-reaching consequences for your household budget. Your spouse may need to quit their job or find a new one, and the cost of living in the new city could differ from where you are now. Assess the financial implications of such a move with your spouse and children to help them navigate through the change. Additionally, if your parents are dependent on you, being farther away could create challenges in terms of their care or support, both financially and emotionally. On the other hand, if you are moving closer to them, they might benefit from having you nearby.
Your financial goals and responsibilities will shift if you are getting married or going through a divorce. You may consider joint savings and create new financial goals in case of a marriage. Conversely, divorce can lead to a division of assets. You may also have child custody disputes, legal fees to cover, alimony arrangements, etc., that can impact you financially. These changes can have a ripple effect on your family, mainly if children are involved.
If you are planning to have children or adopt, it is essential to discuss this with your family as well. Children bring new financial responsibilities, like healthcare and education. Talk to your parents about how your responsibilities may shift once you become a parent. For instance, you might need their help with childcare, or you may want to discuss how their role as grandparents might impact your financial situation. Understanding each other’s expectations can make the transition smoother for everyone.
To conclude
Money talks may not perfectly match the festive cheer of the season, but they are important, nonetheless. Moreover, these discussions do not have to be morbid or serious. You can find cheerful ways to talk about them, perhaps over a picnic or dinner at home. Involving a financial advisor can also help bring up topics that might seem awkward. Having a professional on board always adds value. Use the free advisor match tool to get matched with seasoned financial advisors who can help explain the value of financial planning to your family this holiday season. Answer a few simple questions based on your financial needs and get matched with 2 to 3 financial advisors who may be best suited to help you.
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