Talking to Adult Children About Financial Issues
- Set the stage for the talk by outlining the topics you want to discuss.
- Share your experiences – and admit your mistakes.
- Come up with a plan of action that works for both you and your adult child.
Sharing and making decisions together
Young adults from all economic backgrounds have been living with the realities of a challenging economy, limited job offers, and increased living expenses. If your children are among those going through a lean period in their career or personal lives, the first step to helping them get back on their feet is to have a positive, productive conversation about money and how to manage it.
It’s best if your first money talks aren’t critical or crisis-driven ones.
It also may help to know you’re not alone when it comes to helping your adult children financially. According to a Pew Research Center survey, roughly half (48%) of adults ages 40 to 59 had provided some financial support to at least one grown child in the past year, with 27% providing the primary support.
Set the stage for a positive conversation
The way you talk to adult kids about money can make a big difference in the outcome of the discussion. Your approach also sets the tone for future conversations about financial matters.
As Arne Boudewyn, Managing Director and Head of Family Dynamics for Abbot Downing, a Wells Fargo Company, suggests, “It’s best if your first money talks aren’t critical or crisis-driven ones. Instead, start by sharing factual information, like an interesting article about portfolio construction or the concept of diversifying risk.”
Boudewyn also advises sharing something about your own financial life. Talk about a decision you’re thinking of making or a subject you’re trying to learn more about. Invite your child to share his or her own perspective. You can approach more sensitive money subjects later – after you’ve set a strong, respectful foundation.
Try these tips to help set the stage for a positive discussion:
- Do your homework – get a realistic picture of your child’s financial situation.
- Decide the best way to start the conversation – tread lightly, and don’t be judgmental.
- Prepare to listen – resist the urge to criticize or lecture.
- Share your own similar experiences – and admit your own mistakes.
- Ask if there are ways you can help – it may not be only with money.
Share your experiences
Share a financial mistake you made and explain how you recovered.
Emotionally, it’s hard for parents to balance their desire to help their children when they are financially struggling with their competing wish for their offspring to become financially independent.
Pat Armstrong, Abbot Downing Director of Family Dynamics, sums it up this way: “Most of our clients tell us they want to make sure their good financial fortune doesn’t become misfortune for their children. The good news is that with some intentional work and honest conversations, parents can definitely support their children’s financial aspirations in a positive way.”
Opening up to your adult children and sharing your own financial experiences may help sort out those emotions you have as a parent. An honest discussion may also show your adult child why you feel it’s important to talk about this sensitive topic. The article, “Having a Conversation … With Your Children,” in Beyond Today offers several suggestions to help kick start the conversation:
- Talk about your struggles with money when you were starting out.
- Explain how you were able to achieve a financial goal.
- Share a financial mistake you made and explain how you recovered.
- Talk about financial help your parents may have given you.
- Remind your child it’s never too early to start planning for future goals and retirement.
Come up with a plan together
Here are some guidelines for coming up with a plan to put in motion after you have the conversation. Once you and your child have discussed his or her financial situation – including earnings, savings, debt, 401(k), etc. – work up a plan to:
- Pay off high-interest debt.
- Create a budget.
- Set a time frame for achieving specific financial (and other) goals.
- Decide how much can be allocated for saving and investing.
Keep in mind it’s often easier for adult children to talk to a professional about their finances than it is to talk to their parents. Offer to arrange a meeting with an advisor and your son or daughter. Wells Fargo Advisors understands the concerns of investors with adult children and can offer guidance, assistance, and planning tools to help with your family’s financial concerns.
- Ask your adult child to set aside a time to talk with you about finances.
- Gather as much information as you can about your child’s financial situation; decide what to share about your finances and investments.
- Have the talk – and remember to listen as well as advise.
- Together come up with a plan that includes a budget and several short-term and long-term financial goals.
Abbot Downing, a Wells Fargo business, provides products and services through Wells Fargo Bank, N.A. and its various Wells Fargo Bank, N.A., and its various affiliates and subsidiaries.
Wells Fargo Private Bank and Wells Fargo Wealth Management provide products and services through Wells Fargo Bank, N.A., and its various affiliates and subsidiaries. Wells Fargo Bank, N.A., is a bank affiliate of Wells Fargo & Company.
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