HOW TO TALK ABOUT MONEY
WITH ADULT CHILDREN
May 8, 2023
Our wealth advisors at The Mather Group, LLC (TMG) understand that conversations about money—even with your closest family members—can be awkward. However, when you have children who are poised to receive financial gifts or inherit wealth, we encourage you to initiate a dialogue with them about it. In our experience, most financially successful parents want to share their beliefs and life lessons about money with their adult children—and, heartwarmingly, children are interested in hearing what their parents have to say. This article shares an example of a common client scenario and how we helped the client prepare for an effective and meaningful conversation with his daughters. It also highlights our suggestions for how to open the lines of communication with your own adult children on the topic of money.
David's Dilemma
Our client, David, has a problem many people would like to have: He has more money than he can spend during his lifetime. His problem isn’t what to do with the excess money—that’s been carefully planned out and memorialized in his will and other estate documents. Rather, the problem is that David doesn’t know how to effectively communicate to his two daughters his thoughts about money and his desires for how they should manage their inheritances. Like many of us, David was raised in a family where money was rarely discussed.
To prepare for a conversation with his daughters, we helped David organize his thoughts and the key points he wanted to relay. The more we talked, the more articulate and confident he became. He admitted to having regrets about hoarding money rather than enjoying it. He wanted to encourage his daughters not to be prisoners of their money.
With coaching and practice, David felt ready to diplomatically express his concerns about a financially irresponsible son-in-law and describe the workaround solution we developed. He also gained confidence in explaining why he did not name his eldest daughter as executor of his estate.
Despite his careful planning, after the meeting with his daughters, David told us, “I blew it.” He was lamenting that he didn’t bring up most of the points he wanted to make. We reminded him that this is rarely a one-time conversation, but rather the beginning of a dialogue that may unfold over the course of months, or even years. We also encouraged him not to underestimate the power of the written word—for points that he wants to emphasize or memorialize, he could consider sharing them in emails or letters. The ongoing conversation can take different forms.
Ultimately, David was pleased to have taken the first step and relieved because he had begun making his best effort to help “his girls” manage their inheritance well.
Three Steps for Successful Money Talks
There’s a lesson in David’s tale. Don’t make the mistake of thinking that your estate plan is complete simply because wills and other documents are current. Talking with your loved ones about your plan and how it will affect them is an important part of the process. Here’s how to prepare for a money talk with your adult children.
- Make a list of points you want to cover. To create your list, reflect on questions like:
- What money management approach has served you well over the years?
- What financial missteps have you made and what lessons were learned?
- How do you make spending and saving decisions?
- When and how should spouses/partners collaborate on money decisions?
- What is your investment management philosophy?
- Have the initial conversation. Ideally, you (along with your spouse/partner, if applicable) and your children should meet face-to-face in a quiet location where you will not be interrupted. Rather than delivering a monologue, invite a two-way conversation with lots of opportunities for questions and back-and-forth exchanges. Relax and have fun.
- Follow up. Reach out to each of your kids individually (preferably in person or by phone) to ask for their thoughts or questions. You may realize you forgot to cover important details or want to clarify some points. If so, go back to step one and repeat!
Your children will cherish hearing your advice and wisdom in connection with the money you give them. It’s the foundation upon which they will build their own relationship with money, and it will be a model for how to share their insights with their own children at the appropriate time. Don’t put off this important conversation.
We would welcome the opportunity to brainstorm with you about your money talk. If this would be helpful to you, please contact your Wealth Advisor at your earliest convenience.
The Mather Group, LLC (TMG) is registered under the Investment Advisers Act of 1940 as a Registered Investment Adviser with the Securities and Exchange Commission (SEC). Registration as an investment adviser does not imply a certain level of skill or training. For a detailed discussion of TMG and its investment advisory services and fees, see the firm’s Form ADV on file with the SEC at www.adviserinfo.sec.gov, or on the firm’s website at www.themathergroup.com. The opinions and advice expressed in this communication are based on TMG’s research and professional experience and are expressed as of the publishing date of this communication. Any case study within this piece is for illustrative purposes only, and is not an endorsement or testimony about any client’s experience with TMG. TMG makes no warranty or representation, express or implied, nor does TMG accept any liability, with respect to the information and data set forth herein. TMG specifically disclaims any duty to update any of the information and data contained in this communication. TMG’s advisors are not licensed insurance agents; therefore, they are not able to provide advice or assist in the purchase of insurance or insurance-related products. The information contained in this document is for informational purposes only and your receipt or use of it (1) is not intended as a solicitation for the purchase or sale of any security, (2) is not provided in the course of and does not create or constitute an attorney client relationship, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for obtaining legal advice from a qualified attorney.
