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Discussing finances with your family

As we celebrate the holiday season together and start into the new year, many of us think about our resolutions and intentions. If you are anything like most of my clients, something financial will be on that list. This is certainly the case for our family as well.

As a mom, wife and daughter, I have several different types of financial intentions, and the holiday season offers the opportunity to have these conversations with the important people in my life. For my children, I want to instill healthy money habits and beliefs, which includes our value of giving back. With my husband, I want to look at our current situation, review our priorities and values and keep our financial life in alignment with them. As a daughter, I want to ensure that I know my parents’ wishes and understand how I’m going to help them fulfill those wishes now and later.

Let’s look at some of the conversation you might have with family members this season:

Your spouse

You and your spouse may have different thoughts about a range of financial topics – how much to save, how much to spend, the level of debt with which you’re comfortable and so on. Try to reach some type of consensus on these issues. However, with investing you don’t necessarily have to act in unison all the time. You each may have different investment styles – one of you may be more aggressive, willing to take on more risk in exchange for potentially higher returns, while the other would rather invest with an eye toward mitigating risk, even if it means accepting a lower return.

Of course, there’s nothing stopping each of you from pursuing your individual investment strategies in your own IRA, 401(k) and so on. Still, if you are going to work toward common goals, especially toward a shared vision of your retirement lifestyle, you each may want to compromise in your investment choices. And this accommodation is even more necessary in your joint accounts.

Your parents

It’s highly likely that someday you will be involved with your aging parents’ financial plans, and you should know in advance what to expect. This may not be the easiest conversation to have, but it’s an important one. For example, ask your parents if they have a durable power of attorney, which allows them to designate someone to manage their financial affairs if they become physically or mentally incapacitated. You might also ask if they have protected themselves against the potentially enormous costs of long-term care, such as an extended nursing home stay. If not, suggest that they contact a financial advisor who can offer solutions. Once you begin communicating about these issues, you may well want to go further into your parents’ estate plans to determine what other arrangements, if any, they have made. If it seems that their plans are not fully developed, encourage them to contact an attorney specializing in estate planning.

Your grown children

Just as you talk to your parents about their estate plans, you’ll want to discuss the same topic with your

own grown children. Let them know who you have named as a durable power of attorney, what’s in your

last will and testament and whether you’ve established a living trust. If you’re already working with a

financial advisor and an estate planning professional, make sure your children know how to contact

these individuals. Of course, you don’t have to confine your communications to estate plans – if you

want to help your children financially, such as loaning them money for a down payment on a home, let

them know.

By talking with your loved ones about key financial matters, everyone benefits. Enjoy the holiday season!


Brought to you by:

515 Taggart Dr. NW, Ste #130 Salem, Oregon

(503) 585-1464

Caitlin Davis, CFP®, AAMS®

Financial Advisor, Edward Jones


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