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Money matters – tackling family finances

Difficult financial talks can arise at various phases of life, here is some advice on how to handle some of those difficult topics.

Discussing financial matters can be emotional so knowing when and how to approach potentially problematic circumstances can help reduce the likelihood of money discussions ending in disagreement or unhappiness.

There is often a reluctance to address some of the taboo subjects, particularly estate planning, and the details of how you plan to share your wealth once you're no longer alive. Whilst the thought of those conversations can be difficult and even unpleasant, disagreements over estate plans are on the rise, with many of us expected to have a Will, inheritance, or probate conflict at some point.

It is important to not avoid conversations about financial matters, and creating a culture in your family were discussing finances constructively can benefit everyone. Here are some of the major conversations that may create some obstacles at various phases of life, and which we will examine in our series:

Conversations with your children

Providing children and young people with the skills they need to manage finances and make wise decisions about money, savings, and investments is an excellent place to start. Financial literacy is becoming increasingly important, and discussing money with your children is an excellent first step. This should allow them to learn the fundamentals of how money works and how financial decisions will affect their financial freedom in the future. At the other end of the scale are conversations you may need to have with your adult children about your estate and your intentions. Being open and direct here might help you avoid problems later.

Conversations with your partner

Meeting a partner and deciding to start a life together is an exciting time, but discussing money may be difficult. Bringing your homes, finances, and lifestyles together can lead to some difficult discussions, especially if you bring different assets to the relationship and earn different wages, and you must decide how to handle a joint household budget and agree on spending priorities. If you decide to have a family, things may need to be reviewed again, especially if one of you takes a break and the other handles the finances.

Unfortunately, employment disruptions - whether to raise children or care for elderly relatives - can leave gaps in retirement savings that are difficult to fill. If you met after having children in another relationship and have a blended family, it's equally vital to have those discussions about who pays for what and how you might decide to divide your assets among your children and stepchildren if one of you dies.

Conversations with your parents

These discussions can be emotional, especially if your parents are losing their independence and become more reliant on you or others. Long-term care for elderly relatives is expected to be an issue for many families as lifestyles change and life expectancies increase, therefore it's important to plan how this would need to be paid for and by whom. Add to that the unfortunate reality that dementia rates are rising, and handling your parents' finances, as well as your own, may be something you need to take on. There are numerous tools that may assist in these situations including ensuring that your parents have a Power of Attorney in place so that someone else can step in and manage their finances in an emergency or if they become unable can benefit everyone. A crucial talk to have with your parents' concerns their Wills - whether they have one, where it is kept, and whether it is up to date.

Approaching these conversations openly and without judgment allows you and your loved ones to engage in healthy discussions. Having these conversations at all stages of life can help ensure that family finances are properly managed, do not become a source of contention, and foster more productive management of family finance.

We help clients by facilitating regular meetings to discuss important financial and estate matters in a healthy environment, so they collaborate constructively.

By: Richard Waugh Chartered MCSI

To find out how we can help you manage your family's finances contact;

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