Financial planning / News

Money matters – tackling tough conversations about finance

Talking about money can feel uncomfortable and be fraught with challenges. In this new series, Trust Executive Shannon Brightman, explores some of the tough conversations about finance that come up at different stages of life and offer some thoughts about how you can approach some of those challenging discussions.

It’s no surprise that discussing any aspect of personal finance can be awkward and emotive. Knowing when and how to broach potentially difficult situations can help ease the worry and make it less likely for money discussions to end in upset or dispute.  

Although there’s been a shift in discussing finances in families, especially in younger generations, there’s still a reluctance to tackle some of the subjects perceived as taboo – not least when it comes to estate planning and the details of how you plan to share your wealth once you’re no longer around. It’s worth having those conversations no matter how difficult; money worry is the top issue cited in divorce, and arguments over estate plans sit at a worrying rate, with three-quarters of us likely to experience a Will, inheritance, or probate dispute at some stage in our lives. 

So with that in mind, it’s important not to avoid those potentially difficult discussions about money. Creating a culture in your family where talking about finance is the norm will help everyone. Here are some of the key conversations which might present some challenges in different stages of life, which we’ll be taking a look at through our series: 

Conversations with your children

Ensuring children and young people are equipped with the skills needed to manage finance and make good choices when it comes to money, savings, pensions and investments, is an important start. There’s a growing understanding of the importance of financial literacy and talking about money with your children is a great first step. This should enable them to learn the basics about how money works, and how financial decisions will help shape their ability to achieve financial freedom in years to come. At the other end of the spectrum will be conversations that you may need to tackle with your adult children, as you share details of your wishes about your estate and any bequests which you plan to make. Being open and honest here can save significant issues down the line, especially if you share a clear picture of your intentions with your family and friends.  

Conversations with your partner

Meeting a partner and choosing to create a life together is an exciting time, but talking about money can present significant challenges. Bringing homes, finances and lifestyles together can prompt some tough conversations, especially if you earn different salaries and need to decide how to run a shared household budget and agree spending priorities. Things might need reviewing again if you decide to have a family, especially if one of you takes a break and the other covers the finances. Sadly career breaks – either to raise children or care for older relatives – can create gaps in pension payments which can be hard to recover. So one of the most important conversations will be to decide if the person who is working will cover the other’s pension contributions. If you’ve met after having children in another relationship, and have a blended family, it’s also important to face those conversations about who pays for what, and how you might each decide to divide your estate amongst children and stepchildren when one of you passes away.  

Conversations with your parents

These conversations can be particularly emotive, especially if your parents are starting to struggle with their own independence and are becoming more reliant on you or others. With life expectancies rising, long-term care for older relatives is likely to be a factor for many families, so it’s wise to talk about how this might need to be paid for and by whom. Added to this is the sad reality that rates of dementia are rising, and managing your parents’ finances, as well as your own, could be something you need to take on. There are plenty of ways in which the right tools can help in these situations, and making sure your parents have a Power of Attorney in place, so that someone else can step in and manage their finances in an emergency or if they become unable to, will benefit everyone. And of course, one of the most important conversations to have with your parents is about their Wills – checking they have one in place, where it’s stored and if it’s up-to-date.  

The more you talk about money, the easier it becomes. Approaching these conversations without judgement and condescension helps you and your loved ones engage in healthy discussions and having these conversations at every life stage can help ensure that family finances are properly managed, don’t become an area of upset and create more open attitudes to family finance. 

We look forward to bringing you more detail about some of the likely conversations about money which will come up in your life at different stages, and how best to approach them.