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The Money Conversation Should Convene Now

Will MullinMay 1, 2018

Financial Planning

We talk to the people we love every day and there seems to be very few topics off limits or opinions we cannot share. But how come, when it comes to Money, most of us pretend to think it is none of our business and we should not “go there.” Is our reluctance to have meaningful real conversations about money hurting the people we love the most?

I have a daughter who is heading off to college in the fall. Over the last couple of years, we talked about the process, the choices, the Pros and Cons of each and yes, the cost.  According to the College board, “the average cost of tuition and fees for the 2017-2018 school year was $34,740 at private colleges, $9,970 for state residents at public colleges, and $25,620 for out of -state residents attending public universities.” Add another approximately $15,000 for room and board.  This is a lot of money.  (Yes, as a good financial planner, I had been saving for years to help my smart daughter pay for the college of her dreams.) But what is the true cost and what makes financial sense? My wife and I continue to talk about if and how much we should pay if she should take out loans and what is fair. (Full disclosure, my wife’s family paid for her education and I paid for 100 percent of my education with loans and an eight-year commitment with the military through an ROTC scholarship)

If the average teacher in the U.S. earns $57,740 (Forbes, August 7, 2014), while the Bureau of Labor Statistics (BLS) reports median salary for a registered nurse was $68,450 in 2016, who is helping our children understand the math and the benefit of the education or degree they are earning?  Does it make sense to pay for a school where your child could never afford paying for themselves? Is the major they are pursuing setting them up for a life where they will be financially dependent upon their parents for decades? Who is helping them with the real math and guiding them to understand the long term financial impact of their decisions?

Are we failing our kids because our parents told us that it was not polite to talk about money?  Is our reluctance to talk about money with our kids a learned behavior from our parents? This reluctance is manifesting itself in other ways. And because of this, our parents are retiring and we, their future care givers, have no clue where they stand financially.  We are not talking to our kids because our parents did not talk to us about Money.  And now, at a critical time, we must start the conversation with our parents when they have, for years, avoided the subject of Money with us.

The Federal Reserve has found the median retirement account balance was a little under $60,000 with the mean balance being a little over $200,000.  This might sound good unless you consider the average retired couples’ medical costs are estimated to be over $200,000.  What are your parent’s plans? Do they have enough or are they going to tell you 10 years into retirement they have run out of money.

This continued failed” process” and “taboo” of not talking about money with our family and loved ones is hurting everybody and it needs to stop.  The money conversation must start now.

So how do you start? 

It starts with a conversation with your children and/or you parents.  It begins with you asking them to schedule some time to discuss something very important.  You begin with general topics that are timely, appropriate and respectful. And then you listen.  This is not about having all the answers or getting everything solved in one meeting; this is about starting a lifetime dialogue between people you love to help them with financial questions, decisions and communications. 

You show them that talking about Money is not “taboo” and you are very careful not judge or embarrass them. You are merely trying to ascertain where they are and what they know in order to help educate them and develop a plan.  No matter who it is, it’s about having them feel comfortable about you being a helpful resource to them.  And, if topics come up that are too complicated or difficult, you consider bringing in a trusted advisor or CPA.  It is not about having all the answers, it is about starting the conversation to bring about education and communication before it’s too late. In the end, everyone will be much happier and prepared because you had the courage to start the conversation.

If you would like to speak with an HFA advisor about how to start this critically important conversation or learn how we have helped families have their own “financial meeting”, please feel free to contact us at 610-651-2777.