How to speak to your parents and your children about managing money

17/08/2021

Money can be a difficult topic to bring up with family. Your finances can seem personal, something that shouldn’t be spoken about at home.

But, actually, speaking to your family about money should be encouraged, rather than being seen as a taboo.

Managing money is a team sport for families where you’ll each pass the baton of wealth to the next generation at some point. That’s why it’s important to foster a positive culture around finances, so you can all make the most of your money together.

As part of this, you should try to have conversations about managing money, not just with your own children, but with your parents as well.

Your children will want to learn from you

Managing money is such a crucial skillset that your children will need at some point in their lives. That’s why you should introduce this information to your children as soon as possible.

In fact, a study by the Money Advice Service found that children’s lifelong spending behaviours can be set from as early as age seven.

That means it’s important to encourage sensible habits that will serve your children well in adulthood, helping them to strike the right balance between overspending and being too frugal.

Take the time to speak to your children and help them understand concepts such as saving and spending. Younger children in particular are naturally inquisitive, and so will likely want to learn from you.

For older children, you may be able to give them more practical advice and lessons, such as investing for the first time, starting a pension, or how mortgages work.

Whichever topics you decide to discuss, these conversations will help to promote a healthy attitude towards money.

Your parents will likely happily speak to you

Imagine your child coming to you with financial questions, including personal queries about your current situation and how you’re managing your money.

No doubt you’d be willing to answer their questions fully and honestly, with the intent of cultivating that open relationship around money.

In the same way, your parents will almost certainly willingly speak to you about their experiences.

Having gone through it all before, they’ll be able to pass on first-hand knowledge of drawing pensions, living off retirement income, and planning for their future. Knowing what they did, including any mistakes they made, could help you to refine your own financial plan.

It’s important for you to have these discussions with your parents, especially when it comes to estate planning. Their money will become your issue when they’re no longer around, so it’s vital that you fully understand their situation.

You’ll be able to manage their wealth more effectively if you have foreknowledge of what they have and how it’s organised. Otherwise, you may have to deal with a surprisingly complicated financial situation, while also grieving for them at the same time.

Money is a two-way conversation

One thing many people overlook is that speaking to your parents is also very much a two-way street, where you can offer just as much to them as they can to you.

It’s entirely possible that you’re more financially literate than your parents. As a result, you may be able to help them with any areas they have less knowledge on.

This could include anything, from designing an investment portfolio that works, to creating an estate plan and writing a will that includes everything you need to safeguard your wealth.

If you’ve ever taken financial advice, it might be worth introducing your parents to your financial adviser, too.

You could do this with no expectations whatsoever; just bringing them to your next meeting or review could help them see the value of taking professional financial advice for themselves.

Create an open, honest culture

It’s far easier to speak about money if you continuously have open, honest conversations about finances with your parents and children.

Don’t worry if you haven’t quite managed this yet, as there’s still plenty of time to do so. The key is to start as soon as possible, so that you all have as much time as possible to learn from one another and make the best financial decisions together as a team.

Speak to us

If you’d like help managing your money from a fully qualified financial planner, please get in touch with us at Douglas White.

We can help you and your family to make the most of what you have.

To find out more, please email info@douglaswhiteltd.com or call 0151 345 6828.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.