How to Talk to Your Family About Money

Dealing with touchy money matters between parents and adult children

When your bank of choice had pink ears and a snout, you had no problem talking about money with Mom and Dad. In fact, you were no doubt eager to negotiate a raise in your allowance. But somewhere along the way you learned that money involves a lot more than paper bills and spare change — especially when family is involved.

“Financial decisions are so sensitive because they communicate more than just the way money is handled,” says Rebecca Merrill, coauthor of Life Matters: Creating a Dynamic Balance of Work, Family, Time & Money (McGraw-Hill, $14, http://www.amazon.com/). Money can represent love, security, independence, and more. So how do you navigate all these different meanings and the issues that accompany them? Here, experts weigh in on some sensitive scenarios. Consider it a whole new approach to family values.

My daughter, who has always been very independent, is on her own for the first time. Can I help her out financially without stifling her?

You’re on the right track by honoring her desire to make it on her own, says A. Roger Merrill, Rebecca Merrill’s husband and coauthor. Start by talking with your daughter about how budgeting is tough for people of any age, says Neale Godfrey, author of Money Still Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Teenagers and Young Adults (Rodale, $11, http://www.amazon.com/). Then point her to a website where she can track her spending (see Web Resources). Also, ask her where she needs help — whether it’s with the gym or the utilities — and if she would like you to pay that bill each month. That way, your contribution is consistent, and you know where your money is going.

My in-laws make comments about the way my husband and I spend our money. How can we stop their unsolicited advice?Although it’s undeniably annoying, nagging can be a sign of sincere concern, Godfrey says. So the next time your in-laws offer you and your husband unasked-for advice, view it as a chance to talk with them about your choices and assure them of your financial stability. “Because he’s their son, let your husband do most of the talking,” Godfrey says. “You can sit there repeating to yourself, ‘I love my husband, and he has parents,’” she adds. If you can help your in-laws gain a better grasp of where you’re coming from, they’ll have less cause for worry, Roger Merrill says.
If that doesn’t work, follow the advice of Elizabeth Warren, coauthor (with her daughter, Amelie Tyagi) of All Your Worth: The Ultimate Lifetime Money Plan (Simon & Schuster, $17, http://www.amazon.com/): “Be vague about what you have done and even more vague about what you will do.

Whether you let them bother you is a matter of attitude.”One of my sons is a doctor and the other is a teacher. How can I help the one who is making less money without upsetting the other?

“Money shouldn’t be confused with love or preference,” says David deBoer, a clinical psychologist in Chicago. But because it often is, Godfrey suggests that you first have a conversation with the doctor. “Make sure he knows how much you love him and how proud you are of him,” she says. “Then explain why you want to help his brother.” You might be surprised by his reaction, says Susan Heitler, a clinical psychologist and a coauthor of The Power of Two Workbook (New Harbinger, $14, http://www.amazon.com/): “The more affluent one may be relieved to know you’re helping his brother.” Consider, too, ways that you can support the doctor. For example, he may not have money trouble but could be in need of babysitting. “The gifts don’t have to be financially equitable,” says Dale Atkins, a psychologist and the author of I’m OK, You’re My Parents (Henry Holt, $17, http://www.amazon.com/).

My elderly parents can be really gullible, and I’m afraid someone could take advantage of them. What can I do to help them out with their finances?

The one thing you absolutely want to avoid is telling them, “I’m here to take charge,” Warren says. “Control of one’s money represents autonomy for older adults, just as it did for you when you were breaking out on your own,” adds deBoer. So ease gently into any discussion about money. “An article about how an older person was cheated can be a good way to start a conversation,” Warren says. For a more direct yet still sensitive approach, Ginita Wall, director of the nonprofit group Women’s Institute for Financial Education, suggests that you sit down with your parents and say, “One of you may be on your own someday. How can I help you manage your money and prepare for when that happens?” Some other ways you can assist your parents without upsetting them: Offer to balance their checkbook, take care of paying their bills, or read the fine print on any investments they plan to make, Wall says.

My daughter thinks I go overboard with the gifts I buy her children. She’s asked me to put money into college funds for them instead. I love surprising my grandchildren with presents, but I don’t want to upset my daughter. What should I do?
Nothing will stop grandparents from wanting to give their grandchildren fantastic presents.

“That’s one of the distinct pleasures of being a grandparent,” Godfrey says. However, you should respect your daughter’s wishes when it comes to her children — whether she’s worried that her kids will grow up spoiled or that you’re simply spending too much money. Think about striking a compromise with your daughter, Godfrey suggests. Offer to limit the extravagant gifts to once or twice a year. Then, says Robert Brokamp, retirement editor for The Motley Fool (http://www.fool.com/), you can put some of the money you save into tax-exempt 529 college savings plans, which grandparents can contribute to (see Web Resources). Or perhaps your daughter can put you in charge of giving the “big ticket” gifts for the kids, allowing her to put the money she saves into the college funds. Either way, Godfrey says, you should remember that what your grandchildren want most is quality time with Grandma and Grandpa. “When grandparents visit, they can take the kids to the park, to the museum, or golfing for the day,” she recommends.

My parents insist on paying when we go out to dinner, which is a problem for me. How can I get them to let me cover the check?“
Parents will always be parents, regardless of what age their children are,” Godfrey says. And sometimes that can clash with your attempts to cover the check (whether you want to assert your independence or just feel like treating). This dilemma cannot be solved over dinner (or by a long argument when the check arrives), so try to sidestep it. Pay the bill early, by discreetly passing your credit card to the maître d’ or waiter as you come in. “Often it’s the parents who are most adamant about paying who are the most delighted when you find a graceful way to cover the bill,” Heitler says.

I’m expecting an inheritance from my parents, but I could use the money now to buy a first home. Is there a tactful way to ask for it early? Does this make financial sense?
It might make sense for you, but not necessarily for your parents or for your siblings, deBoer says. There’s no way of knowing if your folks will need their money for an emergency or for catastrophic or long-term care when they get older. And how do you think your brother or sister will feel if, for some reason, your parents’ estate takes a hit, leaving them with a smaller inheritance than the one you already took? “It is presumptuous to expect that kind of help from anybody,” deBoer says.

But if you have no siblings and your parents will not be hindered by digging into their savings now, there are steps you should take to make this proposition less awkward, says Brokamp. First show them how such a deal can make sense for them, too. Ask them where they have most of their money invested. The interest that they’re earning could be less than the interest rate on any home loan you could obtain. Offering them a higher rate of interest (somewhere between what they’re currently earning and what you’d have to pay a bank) makes the offer a better business proposition. Wall made this kind of deal with her father. “I pay only the interest and will never pay back the principal, because that’s my inheritance,” she says. She broached the subject by telling her father that she was buying a house and asking if he would lend her the money. Only after starting the conversation did she suggest that he could make the loan her part of the estate.

Ever since my parents retired, I’ve felt that they’ve been struggling to get by. How can I help them without hurting their pride?“It’s natural for parents to want to be in a position of power in relationships with their children,” deBoer says. “And it can be demoralizing for them to accept help from their kids.” To avoid this situation, Brokamp says, you should employ unobtrusive ways to give them a hand. Gift cards are a great way of disguising a handout. Or set them up with a meal-preparation or cleaning service. If their home needs repairs, send a carpenter or offer to fix the problems yourself. Brokamp also suggests browsing BenefitsCheckUp, a website that matches seniors with service agencies (see Web Resources). “And don’t forget to use special occasions, like Mother’s Day or Father’s Day, to purchase items they might like to have but can’t afford, such as a refrigerator, a television, or a day at the spa,” says Warren.

My son wants to borrow money from me to buy a new car. Should I give him a loan, or would that cause me more trouble than it’s worth?
It depends on your relationship with your son and how responsible you think he is, Godfrey says. If you’re often frustrated by his choices (is he more likely to buy a flashy car than a sensible one?), then don’t agree to the loan. Both parties need to evaluate if this would put a strain on the relationship, and if so, if the loan is worth the risk. If you can and do respect his decisions (even when they seem to fly in the face of common sense), go ahead and give him some financial help. But make it a true loan, Wall says. Have him pay it back on a mutually agreed-upon schedule, with an interest rate that works for both of you.