As local high school graduations are taking place, there will be plenty of tears amongst parents in the audience. Could it be that they realize that they are about to spend tens, if not hundreds, of thousands of dollars over the next several years in the hopes that their kid(s) will earn a decent degree, setting them up to have a successful career for decades to come?
There is a little bit of light-heartedness with that question, but maybe for some parents it’s a reality. While “success” can mean different things to different people, parents hope that college can transition their teenage kid(s) to responsible, level-headed and productive members of society. Hoping they understand college is not just for fraternity/sorority parties and late nights with friends, but about becoming better time-managers, prioritizing, setting boundaries and developing a work ethic that will lay the foundation for success in “The Real World.” If these hopes come true, parents have greater faith in having more meaningful and impactful conversations with their now adult children.
Over the next two decades, $68 trillion in wealth will transfer from Baby Boomers to their heirs and charities. Many adult children will have never dealt with a sudden windfall, know how to manage their inheritance in a way that is conducive to achieving their own objectives or goals, or even know such an inheritance was to be expected. Money can be seen as a topic amongst family members that should never be brought up, similar to talking politics with loved ones that don’t see things the way you do. However, the consequences of not having a plan in place when the inevitable occurs far outweighs a potentially uncomfortable conversation. Having the dreaded “Money Talk” with your children is not one that many parents look forward to, but once “The Talk” is had, it can lead to peace of mind and avoid a level of anxiety, tension and chaos down the road.
Here are some questions that parents may want to start thinking about:
- Do our children know the type of legacy that we want to leave, not just financially, but how we want to be remembered, and the things that we value most?
- Do our children know the factors that led to our wealth – such as disciplined spending, the importance of saving and investing, etc. and have we done our part to instill those values in our own children? (that our children have been given an opportunity that could meaningfully impact their life, and to handle it responsibly)
- Has a discussion taken place to outline what we want our children’s inheritance to accomplish – a portion for charitable purposes, education accounts for the next generation, etc.
- Do they know who our trusted advisors are – financial, legal, etc., and how to get in touch with them when the inevitable occurs?
The hardest part is getting the conversation started, but hopefully taking time to ponder the above and having answers to these questions will help you begin “The Money Talk.”