Having tough conversations with loved ones about money

Talking about money with family and friends is largely still taboo in many homes. 


Finances are unavoidable - it’s a part of life. Yet, speaking with family and friends about finances remains a space few feel comfortable entering. Research confirms that money is often the leading cause of stress in relationships nationwide. 


Despite knowing this, it’s difficult to avoid talking about finances. It’s in every part of life. Planning your finances is impossible without talking about it. Still, sadly, finances and money are not commonly accepted discussion points in many US homes. One of the main reasons is that there is a divide to cross when speaking of finances. Everyone has their own views, experiences, and baggage that they bring to the table. The topic of money can be a sore spot for many; from debt to savings and investments, or lack thereof, many disproportionate scenarios can come to the surface when finances come up.  


How we perceive finances, resources and manage them is significantly impacted by how our parents handled their finances. We go into the world being trained by them - creating a cascading effect where we either try to emulate our parents or avoid making the same mistakes.


It can be tough to identify it, but money is typically interwoven with deeply held learnings around identity, self-worth, independence, control, autonomy, accomplishment, and love. When we look at money this way, it makes sense that it can inspire embarrassment, shame, guilt, jealousy, envy, and feelings of not being good enough. That’s why it can be difficult to have open and transparent conversations with your loved ones around debt and finances. Broaching this subject can easily trigger and cause strife when it is a seemingly innocuous topic. 

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Thanks to this subtle undercurrent of emotions tied to our finances, it’s not surprising that many avoid the topic altogether. Yet, having open and honest discussions about this will not only reduce the amount of stress in your relationships. There is an undoubted cascade effect to this. Speaking about your finances can even help strengthen your relationships along with helping you create a more balanced life.  


Having regular, meaningful conversations about money is essential for a family’s financial well-being. The pressure mounts in situations where adults must care for and support both their children and their aging parents simultaneously.


Not to mention that many people avoid the hard conversations around finances and planning with their aging parents for fear that they will misinterpret intentions or take offense. It can be a touchy subject to traverse. If you’re a parent, you may avoid talking about money altogether for many reasons, including worrying that sharing this knowledge could endanger their ambition or values.


Pushing past any reluctance or fears is vital in building stronger, healthier financial wellness in a family and with your own relationship to money. Discussing money and finance is the first step towards a better financial perspective, improving how you and your family make and reach financial goals together.


Having conversations around the challenging things in life, from end of life plans to money, with your partner, parents, friends, and children, is not easy. Here are some ways to make the process flow better.


How to talk to your partner about money 


It’s never too late to have a conversation with your partner about finances. In many cases, society teaches us to keep the two separate or avoid discussing such crass things as money with loved ones. Yet, when both you and your partner can align on key values and perspectives, you are sure to have a more fulfilling and healthy life together.  


Taking the time can set a positive, goal-oriented tone and ground your dreams into reality. Whether you’re working on reducing debt, saving for a shared goal (i.e., a home), helping a child pay for college, or making an investment together, it all starts with a conversation. 


Before engaging in any conversations, approach without judgment and keep things two-sided. Share as much as you expect them to share. 

Start small

Begin by letting your significant other know your credit score and work up to the bigger things, like planning for retirement or purchasing a home. Not only will this strengthen your relationship early on, but it will also strengthen your financial, physical, and mental health.

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Break the ice by asking broad questions. Frame questions as ‘What if …’ statements to get the ball rolling. By doing this, you can begin to understand where your partner stands and their relationship to money and underlying psychology.


Understand their upbringing


Understanding how your partner was raised and what role money played in their lives is essential to understanding the underlying psychology behind their relationship to money. 


Understanding how someone was raised from a financial perspective can reveal how they view and interact with money today.


As with any values, attitudes, and opinions, much of what we believe comes from our parents and family. An ideal way to understand where your partner or spouse is coming from is to understand their upbringing. Begin by asking questions around their childhood and ask things like: 

“Did you get an allowance?”

“Were your parents particularly strict?” 

“Did your parents have disagreements concerning money?” 

“Have your parents planned for their future? Do you know what their plans are?”


Tackle a shared goal


Once you have asked some questions and shared financial information with your partner, you can move on to the next step: testing out how you align on a shared goal.


This can be anything from saving for a vacation, starting a new job, or working to pay down debt.


When both people are involved, sharing and working on a financial goal together can increase accountability and ensure that you both help one another achieve the goal together. 


Cascade effect


When both of you come to a consensus around money, the impacts will flow down into other areas of your life. How you approach finances together will trickle down to your kids, helping to educate and guide them in building good habits. It will also help make dealing with conversations with parents a bit easier.


Those who discuss debt and tackle finances head-on in a relationship were less likely to feel isolated and prioritize other aspects of their life from health and fitness to overall well-being.


Open communication and honesty are integral to building healthy money dynamics across multiple generations.


How to have conversations about money with your children


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Initiating the conversation with your children concerning finances can be a significant and empowering first step to building healthier relationships with money. 


It’s more common to attempt to shield your family and loved ones entirely from the topic, which can be detrimental. If you feel the need to shy away from this conversation with your loved ones, remember that there is nothing inappropriate about discussing money. Making a household budget and including everyone can be a small but effective way to introduce finances beyond a simple allowance. Budgets are a bite-sized and shared way to begin teaching financial literacy. 


It’s also a fundamental way to teach them how to form healthy relationships with money flowing through every part of their lives. Financial literacy can help them understand how intertwined wants, needs, spending, budgeting, and self-worth are. 


These are fundamental values and understandings that will help them well beyond their life with you and are essential in building a life of their own. If you fear that they are too young, check yourself. Avoid underestimating their child’s ability to understand basic financial concepts - they are quite capable of learning even the simplest of constructs. 

Here’s how to have financial conversations with your children.


Align with your spouse


Before diving into any conversation with your children, make sure you and your spouse are on the same page. 


Have a conversation in advance to ensure your values are aligned. Having common ground around financial matters since children quickly discern and exploit where parental views differ. For example, one parent may believe that chores earn allowances. The other could believe that chores should be done without financial reward. 


Be a united front and understand where one another is coming from before bringing your children into the conversation. 

Avoid lectures


Approach any discussion around finances or money as a conversation. Conversations can be easier and more effective than lectures for you and your children. 


To engage your children in a conversation, start by asking them questions that encourage them to seek answers. Support them in thinking through various value considerations.


Ask them questions that will provoke real-life considerations. 


“How much do you think our household spends on electricity a month?” 

“How much does it cost to maintain a car?”

“Name two things you enjoy doing that don’t cost money.”


These questions will give them a chance to understand the impact of a dollar against everyday, day-to-day things that they may never have considered before. 

Go beyond conversations with real-life scenarios 


Giving your children a chance to gain hands-on experience around finances is vital. As mentioned above, make your household budget a joint effort; exposing your children at a younger age will inevitably give them a deeper appreciation of a dollar.


Opening a savings account and depositing a base amount ($100, for example), and showing them how to manage it by themselves can be a good start. 


Keep them using the account by giving them money or an allowance and encouraging them to deposit into their account regularly. Help them strive for larger goals and teach them to save over a long period. 


Allowances are great for children to learn how to make independent decisions about money. These conversations can set your children up for success at a younger age and can help them understand financial mistakes sooner than later. This, in turn, will help them build up confidence and avoid costly, dire mistakes as adults.  

How to talk to your parents about money


Up there with end-of-life conversations, one of the most dreaded things for an adult is having to have the “money” conversation with their parents. As painful as the thought maybe, talking to your aging parents about money will enable you to build a plan that reflects all your wishes.


There is a lot to cover, from wills and estate planning, retirement, or long-term care choices, to who will make financial decisions on their behalf. This can be daunting, but having these conversations and developing a plan proactively can relieve stress and anxiety and help to build trust and peace of mind.

Have the conversation early


Being proactive about planning with your aging parents can help you avoid making decisions out of necessity or under duress. It can save you money and headaches in the long run by not making important decisions on the fly. 


The time to have the money conversation with your parents is when they are still well, both physically and mentally, and independent. Discussing their finances when they can still communicate their desires and wishes is essential in reducing fears of losing independence or control. It is also good practice to have these conversations with your entire family early, as it might prevent potential family disagreements or even legal battles later on. 


Every family is different, and how you approach this conversation with your parents will differ from how others may come to it. There is no one-size-fits-all solution to dealing with end-of-life or financial planning. Your unique family needs and dynamics will influence how the conversation goes.  

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Be prepared


Before jumping into any conversation with your parents, do some research. 


Take the time to educate yourself on the topics you’ll need to discuss. These include:


  • Healthcare: Medical insurance and expenses, long-term care planning, power of attorney, health care directives;
  • Finances: Income/expenses, retirement planning, location of bank accounts, and access to financial records;
  • End of life plans: wills, estate planning, funeral, and burial/cremation instructions.

Approach with empathy


Understand and recognize that your parents might be concerned about losing independence or control over their lives. 


Approach with empathy, framing it as a way of them maximizing their independent decision-making power now. Doing it early can ensure that their wishes and values are carried out no matter what happens.


Find ways to weave questions into your conversations with your parents to break the ice. For example, you could use your financial planning to open up a discussion around what your parents have already planned.  


Coming to terms with aging and making plans can come with a steep emotional curve. Keep this in mind as you speak with your loved ones; even when it’s in their best interest, they may struggle to come to terms with having to not only plan but to think about things later in life. 

Providing for the future


Money is a part of our day-to-day lives. Ensuring that your loved ones understand the importance of planning and growing their financial fitness is an act of love. 


No matter your own relationship to money, you can begin to foster healthier financial perspectives with your partner, children, and parents by simply engaging in conversations.

Fraction can help prepare you for any conversations you may have. Check out our blog for more resources and financial content.

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