Financial reckoning is almost inevitable for people as they grow older. With age comes a host of changes, and as we grow older, our habits and lifestyles may start to shift. That can make it difficult to plan for the future when so much of our time together is centered around the here and now.
Loved ones may be shocked by the changes in your life, which leaves you wondering whether now is the right time to discuss money and planning for the future. For some people, this may feel like an impossible conversation, especially if they’ve never talked openly about finances before. But with preparation and patience, you can get through it gracefully.
Here are some tips on how to have that conversation with loved ones who might need some financial help in the future:
1) Talk about why you want to have the conversation
The first step towards opening up a financial conversation with your loved one is to figure out why you want to have the conversation in the first place. This will help you think more critically as you approach the actual conversation. One common reason to have this conversation is to set up a future retirement plan.
If you want to work with your loved one in the future, you may need to offer some financial help now to encourage them to start saving early and investing. Another common reason to have this conversation is that you want to help your loved one avoid unnecessary financial stress. This can be particularly important for loved ones with health conditions and people on long-term care or medication costs.
2) Don’t make assumptions about finances
Another tip for having that conversation is to avoid making assumptions about your loved one’s finances. One common assumption many people make is that their loved one is living on a fixed income. This might be the case if your loved one is on a fixed salary or pension, but it’s also common for younger people to live on a fluctuating income.
It’s important to remember that there’s no right or wrong way to manage finances. That’s why it’s so important to avoid making assumptions about your loved one’s finances and motivations. If you feel like you know enough to make assumptions, it’s important to remember that assumptions don’t reflect reality. They often create a less accurate picture of reality.
3) Decide how much you can afford to give
This is one of the most important parts of the conversation. It’s important to not only decide how much you can afford to help with, but also how you’d like to help with it. If your loved one is currently struggling financially, you can offer to help with expenses like utility bills, groceries, or transportation costs.
Alternatively, you can choose to help with a lump sum of money that can be used however your loved one prefers. If your loved one is financially stable and you’d like to help them with their retirement savings, you can set up a Roth IRA account or contribute to an employer-sponsored retirement plan. These are just some examples of how you can help with finances.
You can also choose to help your loved one set up a direct deposit for their paycheck, improve their credit score, or find an online financial planner to help them with their money.
4) Know what’s realistic for your loved one before you discuss money
The last tip for successfully having that conversation is to make sure you have a good idea of what’s realistic for your loved one before you even start talking about money. People often have unrealistic expectations for their finances, which can leave them frustrated when their situation doesn’t turn out as hoped.
You can ask your loved one what their financial goals are, as this will help you get a better idea of what they’re hoping to accomplish in the future. You can also ask what their current financial situation is like and what kind of help they’d like to have in the future. You can also ask them what they’d be open to discussing with you. This can help you steer the conversation in the right direction.
5) Ask open-ended questions to find out more about their financial situation and goals
When you’re ready to have that conversation with your loved one, make sure to bring up the topic casually and gently. Make sure to avoid making it seem like a big deal and keep a positive tone throughout the conversation.
You can properly introduce the topic by asking your loved one how things are going and what they’re up to. You can also ask them what their financial situation is like and what kind of help they’d like to have in the future.
While it’s important to avoid making the conversation about money, it’s also important to find out what your loved one wants to discuss. This can help you steer the conversation toward what’s most important to your loved one.
6) Stay in touch with loved ones who are financially stable
Financial conversations can feel like a daunting challenge when they’re happening with younger loved ones. But when you’re ready to have that conversation with an older loved one, you can break it down into manageable steps.
Start by making sure you’re ready for the conversation and prepared for what comes next. Next, find a way to gently bring up the topic, like talking about a movie or your favorite hobby. Finally, follow up with your loved one periodically to make sure things are going smoothly.
If you feel like you need to have this conversation with a loved one to stay financially stable, it may be a sign that it’s time to start thinking about retirement.