How to Teach Your Family About Money Matters

Some parents and adult children noted that they'd been freely conversing on these matters for years and helping one another in the process. Others, meanwhile, said that their discussions had been inadequate at best. Interfamily variations were common, too: Some parents said that they regularly communicated with one of their children about their retirement and estate plans, while their other children were not involved – either due to lack of interest or because their own financial acumen was lacking.

Posters also shared their ideas for improving communication flow. Talking with children about family finances early on was widely cited as a best practice for families looking to develop healthy financial-communication habits.

'We Don't Talk About Money Other Than in General Terms'

Respondents discussed the quality and volume of the communication flow between themselves and their adult children, and vice versa.

For some contributers, their communication with their adult children on financial matters has been just fine.

Retiredgary wrote, "We have had simple and direct conversations with our daughter about financial matters which are both our business and hers – our assets and estate plans, the tax-efficient inheritance plans for our grandchildren, the unlikelihood she will need to provide us with financial support, and so on. We have tried to discuss other matters, including cases where we offer advice, in more circumspect ways which respect her and our son-in-law's privacy and independence. This has been generally successful and resulted in our advice or at least opinions often being requested and sometimes followed."

For other families, however, the communication flow has been less than ideal. Dragonpat has refrained from providing her children with much information to date.

"Even though my children are my main beneficiaries, I have not discussed the real value of my estate with them. I have felt that this might demotivate them on building their own wealth if they felt that they might be getting a big inheritance someday."

For Dtconroe and their spouse, seeing their children overspend has made it seem less essential to loop them in on their own financial affairs. "We will leave detailed written communications so they know how their inheritance was created, and how that inheritance might work if they don't change it much, but we don't see that our current state of living has created an appropriate atmosphere for a 'family conversation.'"

For Jomil, family discussions about money have stayed on a "need-to-know" basis. "We don't talk about money other than in general terms," this reader said. "My daughter knows where my records are and all but two online passwords that I change periodically. I stopped asking about their financial situation years ago when my daughter did not seem interested in starting a personal pension."

Even within families, some posters said there were big disparities in financial interest level and acumen among children.

Jean43 wrote, "One child is very interested, the other not so much. Both are in their 40s – but just as they both had to go to school, both need to learn how to handle money, whether mine or theirs." 

'These Frank Conversations Are Vital'

Few readers disagreed about the merits of parents and children conversing about money matters. RalphN wrote, "I think it is important that children understand if there is a potential need for them to help their parents and if they can expect something when their parents pass. Communication is essential."

Artsdoc concurred on the importance of the free flow of information between generations. "As parents, if you don't start preparing and talking to your kids about it, you are living very, very dangerously.

“If they are capable of having those conversations, have them. If you fail to acknowledge that these frank conversations are vital, you may deprive your kids of getting to know you better and you will run the risk of creating anger, grief, and lasting memories of irresponsibility and narcissism."

Cgajowski sagely advised others to think of estate planning holistically, and that includes communicating wishes and expectations.

"As adults we should try to plan realistically, anticipating our own fragility and incapacity. That may mean selling property that we can't maintain, cleaning out old stuff, and being very clear with adult children – or nieces and nephews or grandchildren – as to our intentions – to avoid hurt feelings and resentments – before we die or become seriously incapacitated."

'Discussing Financial Matters Should Be Ongoing'

When it comes to finding a healthy groove for communicating financial matters within families, many posters agreed: Get started early, and make the dialogue an ongoing one.

Readers discussed how to look for "openings" to discuss financial matters.

When it comes to getting up-to-date on older parents' situations, Dndhatcher wrote, "I started the conversation by occasionally asking [my parents] about their expenses or other aspects as it relates to retirement planning. I then pursue the conversation if they seem inclined to talk about that specific topic on that particular day. My wife and I talk finances with our children much more and in more detail than my parents ever did. I don't think we will have much issue continuing to talk after they 'leave the nest.'"

Meanwhile, Artsdoc advised that a good time for adult children to ask their parents about the status of their estate plans is when they are crafting their own.

"If you're the adult child, you can at least try to initiate a conversation when you're doing your own estate planning. As you plan your trusts, financial plans, and powers of attorney, ask them what advice they might give you. If you then realise that there is no plan in place, don't be judgmental because they're already probably ashamed of themselves. Try to guide them through it."

For CautiouslyOpt, the death of a parent provided an opportunity to get involved and offer help. "My mother had always managed their household budget, but my father was the investor. When he died suddenly, my mother was overwhelmed by the decisions and paperwork that he had handled alone. I was willing and able to step in, but my goal was just to keep her informed and organized – I wasn't telling her what to do with her money, I spent the next 11 years offering her this simple support – information and organisation. I was very fortunate that she remained clear-minded throughout this time. I occasionally made suggestions and we'd talk them over, but I never pressured her to do anything and always repeated that it was her money and her choice. I think that was why she trusted me."

'Children Often Think Their Parents Are Immortal'

Parents also discussed how they had been able to open up communication between themselves and their adult children.

Tomas47 and his wife called a family meeting to cover a spectrum of topics related to money and aging. "I prepared an agenda with objectives, key discussion points, opportunity for our kids to raise their concerns and questions, critique and next steps. It was to be a business meeting. We covered aging and health care issues as well as financial issues. The key was to make sure each kid understood and agreed to his/her role going forward, and that our wealth transfer plans would not be a problem for them."

'Discussions as Teaching Opportunities'

Parents also discussed how they have tried to coach their adult children on being better financial decision-makers.

For Jean43, making annual financial gifts to her children has helped her stay in the loop on their financial doings. "I gift my children and their spouses every year and this is an opening to the conversation. They often tell me what they are using the money for, and often for advice as to how to invest it. I also have always discussed my investment strategy because I see such discussions as teaching opportunities."

This article originally appeared on Morningstar.com. It has been edited for a UK audience