According to a report by the Money and Pensions Service, 4 million parents don’t talk openly about money with their children.
Yet evidence suggests that those who do discuss finances tend to make better informed and less risky decisions with their money, feel less stressed, and help their children to learn good habits.
When it comes to planning your finances, it can be especially helpful to have a conversation with your adult children. Read on to learn how discussing money together can benefit all of you.
- It could help your children to manage their own finances
It can be a bit of a shock when you first enter the adult world and have to stand on your own two feet. Hopefully you’ve laid the foundations by speaking to your children when they were young about the concepts of budgeting and saving.
But when they reach adulthood, having more transparent conversations about finances could be a timely way to help your child build a solid understanding of how to manage their money.
Things like the concept of “good” and “bad” debt, retirement and tax planning, and the key principles of investing aren’t always covered in schools. Being in the know about how it all works can help your child to ensure they build their financial resilience by making sensible decisions from the beginning.
2. Reassure your children that you are on track to achieve your goals
It’s natural to feel apprehensive about what the future could bring. While you may have been preparing for your retirement for many years, if your children haven’t been privy to these plans, they may be concerned about what might happen when you decide to finish working.
Sitting down as a family to discuss your retirement plan and any details you feel comfortable sharing about your pension provisions could put everyone’s mind at ease. It’s also a helpful way to review your savings so far and see the progress you have made towards your goals.
3. You can let your family know how you’d like to pass on your estate when you die
Of course, an important part of financial planning is creating an estate plan so that your assets can be distributed according to your wishes after your death.
By sharing your wishes with your family, you can help them to understand what you’d like to happen to your assets later on. There are a few benefits to this:
- Your children can have a more informed understanding of what, if any, inheritance they could receive in the future, helping them to plan their own finances more accurately.
- You can feel confident that your wishes will be implemented as you’d like them to be.
- You could reduce the likelihood of disputes about inheritance after you’ve passed away; these can create additional stress at an already very emotional time for your family.
Even though the idea of inheritance can be a difficult one, an open conversation with those who you wish to share the details with can help to remove the discomfort around the subject.
A financial planner can help you to approach these conversations in the right way
If you haven’t discussed money with your family before, the idea of doing so might feel daunting.
There are a few ways that you can make the conversation easier to approach. It might help to speak to everyone at once, so that you all have the chance to contribute to the conversation. Alternatively, speaking to your children one-to-one or in smaller groups might be less daunting.
If you’re struggling to start the conversation, your financial planner could provide you with some suggestions. They might also be able to help mediate the conversation if you think this would be helpful.
Get in touch
If you’d like to learn more about how we can support you in creating an estate plan that puts your mind at ease and allows you to help your family, please get in touch.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.