Family Money Conversations
Today, I am sharing a bonus episode of Martinis and Your Money. A few months back, I attended a happy hour in New York and met Paul Golden from the National Endowment for Financial Education; and he shared with me the research they had funded around people’s decline in financial decision-making. I realized immediately that I wanted to have him on the podcast and specifically to address this topic before the holidays when people are home with their loved ones.I know that money is a taboo topic amongst families and frequently parents don’t want to burden their children or may not trust their children with decision-making, but it doesn’t mean that you shouldn’t start to have money conversations as a family. I advise clients to ask their parents about their financial decisions specifically if something were to happen to them, and if the children are part of the solution, then I believe the conversations need to start as soon as possible.I have seen too many examples as a financial planner of clients who have struggled with their parent’s finances or their spouse’s finances after their loved ones are gone and it’s so much more challenging to have to figure out the financial situation when you are distressed and emotional over losing someone.As you head home for the holidays, I highly encourage you to not only check on your loved ones and make sure they look like they are capable of taking care of their finances, but that you also begin to have the money conversation. The more information and planning you share while you're together, the easier it will be to manage when you're apart; and if all else fails, just play some Adele.
What are we drinking?
Paul Golden – Single malt scotch on the rocks
Shannon – Dirty Gin Martini
Podcast Notes:
The holidays present a great opportunity to see if there are any warning signs that your loved ones have any cognitive deterioration that could impact their money management
Research shows that the peak of financial decision-making occurs in our 50s
5 Warning Signs That There May Be A Financial Decline
Slowness in completing financial tasks. Are stacks of mail piling up? Is there an unopened bank or credit card statement?
Missing key details and financial documents. Are bills being paid twice?
Problems with everyday arithmetic. Do they have difficulty calculating the restaurant tip?
Having a decreased understanding of financial concepts. Do they understand their social security benefits or healthcare coverage?
Difficulty identifying risks in investment opportunities. Are your parent’s susceptible to fraud or investment scams?
Talk to your parents about what they are doing with their money
If there isn’t a plan in place, you become a ward of the state as far as your financial decisions are concerned
If you don’t have trust in your family members then get someone else involved
Shannon shares how she got involved with her mom’s financial situation
We discuss the importance of an inventory of assets and bank accounts
Paul shares a best practice of assigning responsibility to the family to work as a team around the parent’s finances.
Great Resources for family conversations about money