Family & Money is not a Taboo Subject

08/04/2019
Posted in Blog
08/04/2019 Mduduzi Luthuli

In many families, money is unfortunately a taboo topic. Talk of money might bring up a range of complicated feelings that may be rooted in embarrassment, guilt, envy, insecurity, jealousy or shame.

It could also call into question what money means to you, and your understanding of its significance might be intertwined with deeply held perceptions about love, control, independence, accomplishment, identity, self-esteem and self-worth.

Parents might be reluctant to talk about money with their children because they are afraid that too much knowledge will endanger their children’s ambition or values. For the growing number of adult children with aging parents, hesitation in broaching the topic of money sometimes springs from worry that their parents will take offense or misinterpret their motives.

Overcoming this reluctance and having meaningful family conversations about money is an essential part of any family wealth management strategy, especially as an increasing number of people are sandwiched into the role of caring for both their parents and their children. So, how do you talk about money with your family?

Prepare

Whenever a person prefaces a conversation with “we need to talk…” odds are it won’t be a pleasant experience for at least one of you. Most money conversations seem to have ulterior motives, especially if the only time your family talks about money is during a crisis or when a person needs some.

You don’t have to break out bank books and give specific amounts, but you need to start discussing money with your family on a regular basis in order to make it more normal and less taboo. If the first time your family talks about money is when an estate needs to be divided after a death, you’re doing it wrong.

There’s never going to be a perfect time. Bring up that you would like to chat about money, which allows your family to make space in their schedule. It’s best to find an area where you won’t be disturbed. It might be helpful to stay at home where you may have useful paperwork, but then again, going for a walk, away from the home may be easier for others. Choose what works best for you.

Practice the conversation beforehand – this isn’t a theatre performance, so you don’t need to know your lines by heart but do think about the things you’d want to say and have a go saying them out loud. Take it a step further and think about what the other people may say, then come up with answers to that. Try to think of different types of scenarios, not just what you want them to say! If you have a family member or friend who isn’t involved, you may want to try out a bit of role play with the conversation.

Once you’ve managed to get the preparation all done and dusted, you’re in a great position to work out how to start the conversation.

Start

Conversations can be much more effective than lectures. The most effective way to engage your family in a conversation is to ask them questions that encourage them to find their own answers. The goal here is to help them think through the different kinds of value (e.g. emotional value vs. monetary value) that things have. Giving them some food for thought can be as easy as asking them, “How much does it cost to keep a car on the road?” or “what do you deeply enjoy, that doesn’t cost you money?”

Another means of starting the conversation is by using the one-month rule. Assign the family a fictitious monthly salary amount. This amount may be guided by the monthly family expenses or it can be an arbitrary amount agreed upon after discussion. The main point is just to set an amount that acts a benchmark.

If there is an issue that has a rand amount under the “one-month’s salary”, those are discussions that can typically be brought up, talked about, and resolved by the family over dinner. These issues typically would be varied, practical and relevant to the family and thus act as a meaningful way of starting the money conversation within your family.

Anything over the one-month salary threshold, is a topic that typically is not going to be solved over dinner. It then would be left to the discretion of the family heads whether to table such matters and plant the seed to get the ball rolling on the larger-rand and bigger-picture financial topics.

Keep Going

Financial planning isn’t usually taken care of in one conversation. Situations and preferences are subject to constant change. That’s why we recommend planning multiple follow-up conversations between the family to regularly check in with each other and to keep the planning momentum going. It’s important to continuously bring up these topics, even if you must wade through emotional subjects first. Persist through the awkwardness and pain.

The Agenda

To help you get going, below is an example agenda you can use for your first or future family meetings. Tailor it as you see fit. The important thing is to start.

EXAMPLE AGENDA

5:30 — Informal visiting
5:45 — Everyone gets signed in
6:00 — Check in 3 minutes each (this is timed)

  • how’s life?
  • anything you want to share that will help you be more present?

Discussion topic with 5-minute sharing by each person:

  • What are your philanthropic philosophies?
  • How has your approach changed at various stages in your life?
  • What are the factors you consider and how does that inform your decision-making?
  • Have you found any advisors or information sources to be useful?
  • In what ways are they limited?
  • What are your goals for your philanthropic ventures?

Open Discussion
Feedback

Confirm next sessions’ topics
Closing
After 7:00 — Optional hang out time

Other Topic Suggestions

Openness 

Prompt:

  • How are/aren’t you open about your financial situation (to self, family, friends)?

Spending 

Prompt:

  • How do you spend money?
  • What factors weigh into your spending decisions?
  • How has this changed at various stages in your life?

Highlights:

  • Money we spend vs money we earn
  • spending money on experiences like travel vs buying things
  • Education
  • Buying homes
  • Being able to take jobs that don’t pay well, and donate our time
  • Live below our means
  • Raised in a tradition of philanthropy

Investing

Prompt:

  • What are your investment philosophies?
  • How has your approach changed at various stages in your life?
  • What are the factors you consider (i.e., triple bottom line) and how does that inform your investment decision making?
  • Have you found investment advisors to be useful?
  • In what ways are they limited?
  • What are your goals for your investments and have you used a risk questionnaire and/or a values questionnaire to help reach these goals?

Giving 

Prompt:

  • What are your philanthropic philosophies?
  • How has your approach changed at various stages in your life?
  • What are the factors you consider and how does that inform your decision making?
  • Have you found any advisors or information sources to be useful?
  • In what ways are they limited?
  • What are your goals for your philanthropic ventures?

Emergent Questions:

  • How much should/could I give each year?
  • When do I want to be anonymous?
  • How do I follow up on donations to measure success?
  • How can I support social change philanthropy rather than perpetuate dependence?

Remember that the above is simply a guideline and the questions, conversation, time allocation and topics should be tailored to your family dynamics and needs.

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