Money used to be a taboo topic, even among close family members. But for a growing number of Americans, it's now a big deal. Sensitive conversations about money, although difficult to have, are happening more and more often and are essential for people to plan for the wealth and health of their loved ones. When done well, these chats help families understand each other's short- and long-term needs and goals, resulting in a strong financial plan that aligns the whole family.
It's also clear that the conversation around generational wealth is happening faster than ever before. According to the Northwestern Mutual Planning and Progress Study, the average American believes 17 is a good time to start talking to your kids about family finances. And among Millennials and Gen Z, there is a desire to start even earlier. These conversations can help young people build a foundation of financial know-how to succeed in the years to come. But more importantly, it provides an opportunity for families to reconnect about expectations, values, and hopes for the future.
Parents may frown and wonder if their teens would be interested in talking about money and finances. It may come as a surprise, but the answer is a resounding “yes!” According to research from Northwestern Mutual, Gen Z's most trusted source of financial advice is family, followed by financial advisors. As a mother of a teenage boy myself, this is good news for families who are ready to have honest conversations about money, and it provides an opportunity for professional advisors to guide families in their financial decisions.
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It's time to talk. However, just because there is a desire to connect does not mean it will be easy. Money conversations can be difficult for most families because they can be emotionally charged. Often, having a trusted financial advisor at the table can help address any sensitive issues, account for blind spots, and ensure a judgment-free or pressure-free discussion. Done well, these conversations are empowering and help bring families closer together. As Americans reach out to financial advisors for their annual financial check-ups, those who are adding a seat to the table for the next generation so the whole family can prepare for their financial future together. I expect it to increase.
The survey found that only 3 in 10 (29%) U.S. adults have discussed wills, inheritance wishes, or other property issues with their parents or guardians, and only 3 in 10 (29%) have discussed long-term care. Only 43% had discussed it. Again, our data shows that younger generations want these conversations to happen sooner, and rightly so. Planning creates more opportunities. It gives people the freedom and power to consider all options for care and aging gracefully, and to make these decisions for themselves while they still can.
Future generations will undergo the largest transfer of wealth in U.S. history, with baby boomers transferring $90 trillion in wealth, most of it to their loved ones. However, inherited property is not an unlimited property. Many wealthy families lose their accumulated wealth by the second generation. Early preventative discussions are important and ensure that intergenerational planning protects the accumulated wealth.
As parents consider when and how to involve their children in more complex or sensitive financial planning discussions, here are three simple tips to help make money conversations go more smoothly. Recommended.
1. Encourage children to talk about their dreams and plans.
Many parents want to have open and honest money conversations with their teens. However, the most important thing about honest conversations about money is to let your kids lead the conversation.
Ask them to talk about their financial goals and the decisions they need to make, such as saving for college or buying a car, and give them sound advice. Passing down financial strategies is important for fostering wealth across generations, but these discussions must be based on our children's terms and timelines, not our own.
2. Talk about your assets and financial security.
If you have adult children, this is the perfect time to share important information about your inheritance. If you plan to leave a legacy, this may help give your children financial security. It's important to discuss what potential assets are in your estate plan, such as real estate, vehicles, art, family heirlooms, and digital assets. Even if you don't plan to leave a legacy, conversations can help the next generation understand what will happen in the future and how to plan.
3. Share your long-term care plan.
Many parents have long-term care plans in place. These plans typically take into account potential costs associated with home care and assisted living needs. Your family should discuss with your child any plans in place, such as a durable power of attorney detailing the financial or medical decisions you want them to make on your behalf if you are no longer able to assert your rights. is needed. This is especially important if your child will be your financial power of attorney.
After all, people have to decide whether they would prefer to discuss it with their families now or make very difficult decisions in the future. The younger generation wisely wants to have the conversation now. This is an opportunity for families to discuss and reach consensus about their financial situation, retirement prospects and long-term care arrangements, ensuring their wishes are understood, respected and planned for. is.
Emotions are high and the stakes are high, so talking to a trusted financial advisor can be a great help. But ultimately the most important thing is to keep the lines of communication open and the conversation going.
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This article was written by and represents the views of our contributing advisors and not of Kiplinger's editorial staff. To view your advisor's records, SEC or together finra.
