When it comes to personal finances, both parents and adult children behave in the same way. Both are not interested to have a healthy discussion about their personal finances. Let's find out why.
Reasons why there is a communication gap between parents and kids
Check out the probable reasons why both parents and adults choose to not discuss about their financial plans with each other.
Reasons for the parents
1. They don't want their kids to have high expectation.
As per the Fidelity's Intra-Family Generational Finance Study, this is the main reason behind the communication. A lot of parents avoid having a discussion about their retirement plans with children because they don't want their kids to have high hopes about future inheritance. They want their children to be self-dependent.
As per the senior vice president of personal investing for Fidelity Investment, Lauren Brouhard:
âIt's not surprising that parents appear to want to put off discussing money matters with their children as long as possible, especially when it comes to how much of an inheritance they stand to gain."
2. They don't have a proper retirement plan.
Some parents are not bothered about their retirement plans as they must be. They don't know how much they need to spend the golden years of their life. Needless to say, they have nothing to discuss with their children.
Reasons for the adult children
1. They have a wrong idea about parents' estate.
Adult children miscalculate the value of their parents' estate. Some children underestimate the value by around $300,000. The figure has increased by a great margin in the last 2 years. Earlier, adult children underestimated estate value by around $100,000 or more.
2. They don't want to upset their parents.
Lots of families consider money as a private matter. It is regarded as a taboo subject and several people are uncomfortable in discussing about it. This prompts children to stay away from initiating a discussion with parents. They don't want to hurt the sentiments of their parents.
3. They're reluctant to discuss about their wage
Once children enter into their professional life, they consider themselves truly independent. They're grown up and feel shy to discuss about their wage with parents. They would rather talk about it with their friends than parents.
Should parents and adult children discuss about money matters?
It is necessary for kids and parents to have a discussion about retirement planning before making any final decision. The biggest benefit of having a fruitful discussion is that parents would have a greater confidence. Study shows that 93% of parents felt confident about their plans after having a discussion with their adult kids regarding wills and estate. Besides, 73% of parents said that it made a positive impact upon their kids' emotional state of mind.
Adult kids benefit a lot from these discussions. They get an idea about their parents' financial condition. They're better equipped to tackle emergency situations especially when adult children have to take major monetary or medical decision on their parents' behalf.
If both the parents and kids are reluctant to discuss about their wage and financial assets, then they need to at least cover the basics. They can share the following financial details with each other:
- Where the legal documents have been kept
- The contact number of family lawyer
- The account number of a financial account
- The contact information of a financial advisor
Discussions about money related matters are really important. They help to clear a lot of confusions. Adult children may come to know that their parents are really pro at money management. They can really learn a lot from their parents.
Parents really need to discuss about money matters with their family. As per the Fidelity's Intra-Family Generational Finance Study, 40% of parents don't have an in-depth discussion about how to cover necessary expenses after retirement. Again, 15% parents don't have any sort of discussion about this topic with their family.
The result of the survey also revealed that 43% of parents have not gone into detailed discussions with immediate family regarding healthcare expenditures. Another 20% don't enter into any sort of conversation regarding this topic at all.
Life is much more complex than what you anticipate. When it comes to personal finances and retirement plans, parents should involve their children in the decision making process. The final decision should be made as per the desire of parents. After all, they have worked throughout their life to build up their nest egg. They should have the freedom to decide how to spend their retirement life.
Children should ask as many questions as possible to their parents. This would help them to understand their role and what kind of conversation they need to have, and with whom. This in turn would result in better emotional bonding between parents and children.
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