3 Steps to Talking Money With Your Parents

According to a survey by GOBankingRates, more than 73 percent of us have not had a detailed discussion with our parents about finances. One of the primary reasons is because we just don't know how to have the conversation.

But figuring it out should be high on everyone's to-do list: every person with a living parent will deal with their financial issues one way or another — either because you do have a plan in place, or you’re suddenly face to face with an unforeseen event. It is so much smarter to talk about this when your parents are sharp, in good health, and not in the midst of any crisis.

Put your parents on the (top of the) list of all you plan to get to this month – because all your other goals are going to get sidelined if they become a burden to themselves, or to you. Make time for The Talk.

Prepare: Be open to your parents’ reality

A Fidelity survey reported 72 percent of parents expect one of their kids will take on the long-term caregiver duties if needed. Is it a surprise that 40 percent of those identified as future caregivers had no idea? 

The best and most important thing to prioritize is a conversation with your parents about their situation, their wishes, their reality. 22 percent of adults don’t think they should ever have this get-real conversation because they think their parents’ finances aren’t any of their business. "I can understand the reluctance," says Cameron Huddleston, author of the book Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. "But that 22 percent who think their parents’ finances are none of their business don’t realize there’s a good chance that their parents’ finances will be their business at some point."

Need encouragement? Ask yourself: Am I prepared for the real possibility that I’ll be paying for my parents’ medical bills myself if I don’t have access to their bank account? If my dad has a bad fall or a stroke and the hospital decides to transfer him to an assisted living facility, am I ready to pay every bill required? 

Unless he signed over power of attorney so you can write checks out of his account, you don’t have access and it’ll be all on you.

Worse, if your parent is no longer able to make decisions — maybe from an accident or dementia or a stroke — and doesn’t have a will or an advance health care directive, and hasn’t given you or a sibling power of attorney, then you can’t make health decisions either. Dealing with the long, expensive legal process to be named guardian or conservator after the fact is the last thing you’ll want to do.

First step: Taking charge

Each of us knows we ought to have these conversations. It’s likely your parents know it too. In fact, they probably think about it more than you do. They don’t want to be a burden to you and their loved ones. So, put yourself in their shoes — wouldn’t it be great to be asked? Stop waiting and do it — just remember to be considerate of the timing. 

"Often kids will say, 'We're all together. Let's talk to Mom now,'" eldercare expert Linda Fodrini-Johnson says. "That's not okay. There's usually alcohol, little kids, and people who shouldn't hear the conversation are there."

Here are some simple steps to take:

1. Plan a visit -- Explain to your parents a little about what you want to discuss and why and, as wealth psychology expert Kathleen Burns Kingsley suggests, lead with love.
2. Don't rush it -- As Huddleston writes, "You'll have much more success if you try to start a conversation with your parents at a time when everyone is relaxed and emotions aren't running high. If you have siblings and all of you want to be present, you need to decide jointly when you can gather to have a calm discussion that is free of distractions and time constraints. I know that's tough when we all have busy lives, but it's an important conversation that shouldn't be rushed."
3. Make a list of specific questions to bring, including topics such as their will, caregiving preferences, and basic insurance information, and, as Huddleston suggests, use what-if scenarios. "For example, you could ask what would happen if both of them ended up in the hospital after a car accident. Let them know that someone would have to be designated as a health care power of attorney to speak with their doctors and make medical decisions for them if they couldn't on their own. And someone would have to be designated as power of attorney to handle financial transactions for them, such as paying bills."

Take notes and listen, but don't expect to finish it all in an afternoon. "It's probably a progression of conversations," says Josh Nelson, founder and CEO of Keystone Financial Services. "This is probably not a one-time sit down, 'I'm going to spill my guts and tell you everything – now we're done.'" 

Next steps, you can explain, is for you to keep building on the info bit by bit, and create a playbook everyone can all use to help if or when they need it. Bonus? They’re going to be glad to have all their info in one place too.

Second Step: The Playbook

Organizing accounts and documents isn’t everyone’s favorite pastime. But everyone does understand the need to plan for the unknown. So, the Playbook, you will explain, is a “break glass in case of emergency” resource. When complete, it will include:

• Accounts: From banks and credit cards to utilities and cable TV. Give them a sheet with the name of each service provider they can think of filled in. They should keep it wherever they stack the bills. And when they get a bill or a statement, they jot each one down (including account number) for a month or so.
• Documents: Their will, advanced directives and powers of attorney, property titles, mortgages, tax returns, insurance policies, marriage and birth certificates, military records, financial account information. They should focus on finding them first, and organize them second. Make a checklist for them so that as they find each they can record document type, name, and relevant info. Or, just make a big pile that you can work through on your next visit.
• Contacts: Start a master list of key contact information, phone and emails for their advisors and representatives, like attorneys, financial advisors and life insurance agents. Tell them to add to it.
• Hide and seek. Out of sight, out of mind. Find out if there are things hidden away. Like in a safe deposit box or under a mattress.
• Docs & Meds: Build a contact list of all their doctors, and notes on the medications they’re taking, including where their prescriptions are filled.

Third Step: Much Respect

Through it all, remember that these conversations will be difficult for your parents — treat them like you would want to be treated, even if it becomes frustrating. "A big part of aging is dealing with a loss of control over your physical and mental health. Elderly parents know that in time they will need more support, but they often don’t want to face this reality," Huddleston writes. "When discussing how you can help them with financial matters, reassure them that this is not an attempt to take over their life, simply an offer to help them as they age. Whenever possible, invite your parent to decide what to address and when. By doing so, you are demonstrating that you are there to support them, not to take over."

See these articles for more ideas to get you started:

10 Ways to Talk to Your Aging Parents About Their Finances, by Cameron Huddleston for Kiplingers

7 Tips for Talking to Your Aging Parents About Money, by PBS

Talk to Aging Parents About Finances, by SmartAboutMoney.org