May 8, 2024

Discuss These Financial Topics with Your Adult Children

About Nicole Pajer

Nicole Pajer is a Los Angeles-based freelance published in The New York Times, Woman's Day, AARP, Parade, Wired, Glamour, People and more.

Money is often perceived as a taboo topic – one that you shouldn’t discuss with friends or loved ones. But there can be great benefits in talking to your adult children about your finances. First off, sharing the steps you took to get where you are today could potentially motivate them to make their own smart money moves. Talking about finances can also help your kids to know what to expect should you need financial support or to seek out a care plan. And being transparent about your assets can make it easier for estate planning so that you can help ensure that your money gets left to the people you truly want it to go to.

So, what types of conversations should you be having? Here are some financial categories to start talking about.

A comprehensive list of assets and liabilities
Try to compile a detailed list of all of your assets, like your savings accounts, retirement accounts, and real estate properties. It’s also a good idea to list out your liabilities, like your mortgages, loans, credit card debts. “This helps your adult children understand the family financial health, what resources are available and what obligations exist,” says Chad Gammon, a financial planner for Arnold and Mote Wealth Management.

Living will and healthcare proxy
Consult with an estate attorney to draft a living will and appoint a health care proxy. “The living will [will] outline your wishes for medical treatment if you are unable to make decisions yourself,” explains Gammon. “The healthcare proxy designates someone to make healthcare decisions on your behalf when you are unable to.” Doing this can help to document your healthcare wishes and may relieve your adult children or other loved ones of the burden of making medical decisions. And it can bring peace of mind to yourself and your children.

Beneficiary designations
You may think you have all your beneficiaries set up, but some could be outdated. For instance, you could have grandkids in the time since you set up your beneficiaries and you might want to make sure they are listed as well. Regularly review and update beneficiary designations on financial accounts, retirement plans, and life insurance policies. “Schedule annual reviews to ensure that beneficiary designations align with your current wishes and family circumstances,” suggests Mitch Mitchell, associate counsel and estate planner at Trust & Will, an online estate planning business. Updating beneficiary designations, he adds, helps avoid unintended consequences, such as assets passing to ex-spouses or unintended beneficiaries, and can help to ensure that assets are distributed according to your wishes.

Financial goals and wishes
“Have open and honest discussions with your adult children about your financial goals, values, and wishes for the future,” says Mitchell. He suggests scheduling regular family meetings to discuss financial matters, including inheritance plans, charitable giving preferences, and long-term care wishes. “Transparent communication fosters understanding and unity within the family, reduces the likelihood of disputes, and empowers adult children to make informed decisions on your behalf,” he explains.

During these conversations, you can also try to educate adult children on their financial responsibilities, including managing inheritances, handling debts, and navigating financial decisions. “Offer guidance and resources to help adult children develop financial literacy and responsible money management skills,” says Mitchell. This can help them to make informed decisions and effectively manage their inheritance, helping to reduce the risk of financial mismanagement or disputes.

Your experiences with retirement
Finally, talking about your own path into retirement may help to teach your children some steps they can be taking today to guide their own Golden Years. You can discuss what worked for you and what you wish you could have changed. “Offer guidance on these topics,” says Gammon. Sharing your journey can potentially help to steer them clear of the setbacks you encountered or shed light on successful strategies. “Conversations about finances are not always common within families, yet this can benefit your children's future,” Gammon adds. “Along the way, there might be amusing stories of moments that once caused stress, but with hindsight and wisdom, you can now recount with a laugh and a smile.”

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