With Thanksgiving approaching, many people will see their families. When we love our family, we want what’s best for them. Sometimes this involves conversations about money. Money can be a taboo topic in American society, just as health and politics can create “awkwardness” at the dinner table. We all know that feeling when someone brings up a political conversation at a family dinner (advocating for either left or right views) and their deep intent is just to spout their viewpoint with the goal of asserting their viewpoint’s supposed superiority. We internally cringe. We can get the same feeling when someone brings up health or criticizes some else’s weight. We lump this into either someone trying to elevate themselves above everyone else or denigrate others below them. The position of our heart is very important before bringing up “touchy” subjects. Money is no different.
As a financial planner, I want what’s best for our clients, their families, and our community. This means helping people talk about finances with their family members. Sometimes we see family members making poor money decisions, and we want to help. With Thanksgiving on the horizon, I hope you’ll use the tips in this blog post to help bring up difficult conversations regarding money with family (or friends).
Tip #1: Address root cause issues first
Suppose you have a family member or friend addicted to alcohol. They are spending too much money on alcohol (obviously). Alcoholism is the root issue, not the spending. Don’t try to address the spending on alcohol before trying to address alcohol addiction. This is an obvious example, but it proves a point that extrapolates out to other situations.
Suppose you have a 29-year-old son that you believe isn’t saving enough for retirement. Before having a conversation with him, consider if there is a root cause. Is your son lonely and thus needs to spend money socializing with friends that he could be putting towards retirement. Could you address that deep need at the same time as bringing up retirement savings? Could you offer to have your son bring a few friends to Thanksgiving to show you value his time with friends / socializing? Then can you can also bring up the importance of saving early for retirement.
Tip #2: Assume positive intent
This is a “teacher hack”. When I used to teach, I learned quickly that whenever there was a disagreement with a student, I ALWAYS had to assume their actions had “positive intent” to preserve the student-teacher relationship. Same goes in the family. Let’s use the same example as Tip #1, your 29-year-old son spends too much money socializing with friends but not enough money saving for retirement. Instead of saying, “You spend too much money socializing and not enough saving for retirement.”, you can say, “I really appreciate the loyalty you show to your friends. You always set aside time and money to see them. I really want you enjoy that side of life, and developing friendships in your 20s and 30s require more effort than when you were in school. But I am concerned that you are missing out on a very important part of your future savings. How would you feel about spending a little less money socializing and saving more money for retirement when the benefits of compound interest can realize in your 20s and 30s.” Assuming positive intent takes a person’s guard down.
And if you are thinking, “I just don’t have time to get in the mode of assuming positive intent. They just need to listen”, then I would argue you don’t actually value the person enough to where they really should listen to the advice you have to offer. Food for thought.
Tip #3: Pull people aside
Money is a controversial topic in the US, don’t bring it up in group settings. It’s better that if you have advice to give, do so in a private setting, not at the dinner table.
Tip #4: Share your vision and hope for their lives and how it relates to your life
I’m going to flip this example around. Suppose you are 45 years old and you believe your 70-year-old parents are spending too much money and whittling down their retirement savings too quickly. You’re worried that you will need to support them later on. How do you address this?
First, if it’s a matter of inheritance. Back off. Your parents worked hard to save money for their retirement, and they have no right to give it to you. They can do what they want with it. But if you are genuinely concerned their spending will leave them in poverty at a later age, it’s worth having a conversation and addressing it.
Your conversation can go something along the lines of, “Mom & Dad, I love you and I am really thankful for all that you’ve done in my life. You raised me as a child, and you are always available to talk. I want you to enjoy your retirement, and you have every right to do so given how hard you’ve worked during your career. I don’t anticipate or expect any inheritance, and that’s not the purpose of this discussion. However, I’ve noticed some spending recently that makes me worry that you’ll run out of money. As a concerned child, do you think you’d be willing to share some of your financial picture to put me at ease?” Based on what your parents say, that could open an entire door, but if they refuse, you can push a little further. “I understand that you want privacy in your finances. One of my concerns is that I feel a responsibility to take care of you when you get older, but I don’t have a sense of the financial responsibility that this might entail. I need to plan for that accordingly, and, to be honest, I have my own hopes/dreams/goals that I’m currently allocating my money towards. I need to know how this is all going to interact in the future. Can we talk in more detail about what that would look like?” Obviously this isn’t going to happen all in one sitting after a Thanksgiving meal, but it at least opens a door for future conversations.
Tip #5: Bring up difficult conversations on a full stomach
I love my wife. She is way cooler, nicer, and more talented than me. She is just overall a more gifted human being than I am. We don’t fight particularly often, primarily because I know lucky I am to be married to her. But when we do fight, an empty stomach is a contributing factor 90% of the time. If you plan to bring a subject with someone that you know could be difficult, do so after a meal.
Tip #6: Use actual numbers and real-life examples but acknowledge limiting factors
When creating a financial plan, I always try to steer away from general advice until I know the details of a client’s situation. That’s because everyone has different factors influencing their financial situation. This goes for giving financial advice to families as well. Don’t say things such as “I invested $10,000 in Tesla stock and it zoomed up,” without acknowledging that you already fully fund your retirement plan at work. You actually had $10,000 to work with that wasn’t your retirement savings. You actually felt like you had the cushion to invest that. Other people might not. If they don’t have retirement savings, they frankly shouldn’t invest in a single stock, they need to get to funding their retirement with a well-diversified portfolio. You need to acknowledge contributing factors when sharing something about your own life. Otherwise, people feel stressed.
Hopefully, you’ve found this advice useful, and perhaps you could even apply it to something other than money and finances. Wishing you a warm Thanksgiving from Independent Financial Planning.
