Click below to listen to Episode 25 – It’s All in the Family Part 1

It’s All in the Family Part 1

Tips for discussing financial wishes with children and parents.

Talking about finances can be a taboo subject that is difficult to discuss. This difficulty is multiplied when it comes to discussing current financial situations and a financial future family members. In Part 1 of our 2 part series “It’s All In The Family”, Bob and Mary Jo discuss the importance of having these financial conversations with family members – specifically one’s parents and one’s children.

It may seem like a subject that is spent better talking about on a rainy day, but there is actually no time like the present to attack financial issues to try and make sure that your financial wishes, or those of your parents, are understood. Bob and Mary Jo share ways to discuss topics like estate planning with your family and how to approach this sensitive topic.

HOSTED BY: Bob Barber, CWS® and Mary Jo Lyons, CFP®

Mentioned In This Episode

Christian Financial Advisors
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Bob Barber, CWS®, CKA®
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Mary Jo Lyons, CFP®, CKA®
Ep 16 – Procrastination
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EPISODE TRANSCRIPT

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a weekly podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

[EPISODE]

Bob:
1 John 3, “Dear children. Let’s not merely say that we love each other, let us show the truth by our actions. Our actions will show that we belong to the truth, so we will be confident when we stand before God.”

Mary Jo:
Oh, those are great, Bob, great scripture choices for today’s episode. Bob, this week, we have something really important to share with our listeners, and that’s how to talk to the people we care about regarding money. Specifically, in this week’s show, we’re going to talk about talking. Talking to your kids, talking to your parents, and talking to your spouse about financial issues. And that one in itself is a pretty meaty one. So, I think we’re going to make this a series, and we’ll probably try to tackle that one next week. What do you think?

Bob:
I think it’s great. Yeah, let’s do a two part series. Today, we’ll share some ideas about talking to your kids and your parents. Now, wait a second. That’s different, isn’t it?

Mary Jo:
Yeah, it is.

Bob:
Because you think about it, our generation, well, I’m giving away our age now a little bit. Like my mom is still alive and I’ve got my children coming up, too. So it’s called the sandwich generation and more and more, the sandwich generation is getting larger because we’re living longer. Does that make sense?

Mary Jo:
Oh, certainly.

Bob:
Yeah. This week we’re going to be talking about the kids and the parents. And next week, we’re just going to talk about some ideas about talking with your spouse, which we know can be difficult because talk with your spouse can be a tough one. So we thought we’d devote an entire program to just having that money talk with your spouse. It sounds like fun.

Mary Jo:
Well, we’re going to try to make it more fun, and really kind of set the stage of why it’s so important. And we’re calling these episodes all in the family. So from experience counseling our clients, we know that money can separate families, but we also know that if there’s one thing families want more than anything, it’s harmony, but that does seem to be challenging. In some families, it’s more challenging than others. And yet communicating with those we love the most can, in many times, be just incredibly hard. So, Bob, do you think it’s impossible to actually talk about money and maintain harmony?

Bob:
Well, I don’t think it’s impossible, but it can be done. I think it has to be done in a loving way and very carefully. I think we need to start off in prayer before you want to talk to your family about it. Open up that communication barrier and try to get that barrier out of the way. Mary Jo, really be led by the Holy Spirit and watch our tongue, things that we might say that are hurtful. I was thinking about this. And when I was thinking about talking about this, I was thinking about James 3:9. And it says, “With the tongue, we can praise our Lord and father, but with it, we can also curse human beings who have been made in God’s likeness.” So we really need to be careful when we’re discussing this, to make sure that we’re in harmony with our family, because family harmony is really what God wants, but it doesn’t happen. It didn’t just come along easily, many times for many people. So it may take some effort, but Mary Jo, you and I as trusted financial advisors, we’re called upon to assist our clients with creating that legacy and help them talk openly about those financial issues. And we want to help them create a spiritual legacy, but we want to help them create that monetary money legacy for the family as well, if it’s done in a wise way. I just feel like we’re also counselors. Nathaniel just said today in our office, he said, you need to get a major in psychology and a minor in finance instead of the other way around. It’s interesting that you say that’s true because it really is.

Mary Jo:
Yes. Well said. I know some families don’t relish the thought of creating an open dialogue and having that discussion. They fear that conflict is going to arise because that’s what they’ve experienced so often. But talking with our parents and our kids about money can be difficult for a lot of different reasons. Number one, it can evoke unpleasant memories from childhood.

Bob:
Iur own parents may not have had a healthy relationship with money. So, they may have had too much or actually too little growing up.

Mary Jo:
It wasn’t talked about growing up. A lot of times it was just hush, hush. They never dealt with money openly.

Bob:
I think the older generation is like that, especially those that grew up in the thirties and forties. You don’t discuss finances. Some parents want to shelter their kids from all the money concerns too, and that’s not such a wise choice.

Mary Jo:
Well, and then some of them in affluent households, they don’t have as many money concerns. So, it’s not a constant source of struggle within the family. There’s that to consider as well. But a lot of times parents only discuss finances behind closed doors.

Bob:
And there can be cultural issues when it comes to talking about money also, would you not agree?

Mary Jo:
Oh, absolutely. And there are certain cultures that it’s just very taboo. We’re not talking about making this a public conversation. This is really just among your immediate family. And so we’ve kind of been trained and brought up to avoid talking about money and politics, but that’s really not what we’re talking about.

Bob:
I think there’s some really good points that you have in here. Like you might not want to give up control or you may feel out of control.

Mary Jo:
Exactly. I think one of the big ones that parents are concerned about and elderly parents, for example, they’re afraid that their kids will judge them. They also may no longer be able to handle money, and they also are afraid they’re going to get taken advantage of. There’s so much that we hear about about seniors that are victims to fraud and predator practices, if you will. So it’s a big concern for families. Also, the healthcare costs can be a lifetime of savings without a plan in place. So, are they prepared? That’s certainly something that you want to talk to them about.

Bob:
Mary Jo, really the family dynamics, they play all into this and there’s those sibling rivalries that happen sometimes. I think you have something that you want to share here that your mom gave you.

Mary Jo:
I just remember as we got older and spouses came into the mix, one year at Christmas, she gave us each a book on sibling rivalry. Unfortunately, it didn’t help, but it was a good thought.

Bob:
Another thing is many times you may rely on the oldest child and that may be a good idea, or it may not be. It depends on if that oldest child is really good with finance. And many times they are because of, have you ever heard of the birth order before?

Mary Jo:
Oh, sure. And there’s certain personality traits depending on what order you fall into.

Bob:
Because all those children are different. I know with my three, they’re very different. One can be very conservative. One can be very liberal, and then one can be right in the middle. And again, a lot of times it has to do with birth order. You have got to be careful because they can use money to control or manipulate one parent over the other. A child that maybe has grown up very wealthy in a wealthy family can definitely have a sense of entitlement to the parents’ money. I’ve seen this helping people over the years, especially if they were raised in wealth, and jealousy can come between those brothers and sisters in the later years.

Mary Jo:
I think you’re absolutely right. And there was one thing as you were talking that kind of popped into my mind. It amazes me in my family, and there were four of us all within about five years of each other. So, we were very close together in age. And what was interesting, even though we may only be a year apart, our vision or our version and interpretation of a situation that we approached as a family is very different depending on how old we were at the time it happened. And so, that really changes your perception. And it’s kind of amazing to me. We were all raised in the same house, but we all had different feelings regarding certain situations.

Bob:
Mary Jo, when we get back to the birth order and talking about that, and I’ve studied some of that too. It’s interesting. Let’s say a family has five children. You will have a characteristic, maybe of the fourth or fifth child, take on the same characteristic as the oldest child, especially if they’re some years apart.

Mary Jo:
Oh, that makes sense.

Bob:
Does that make sense?

Mary Jo:
Yes, it does. There’s a long list of the family dynamic and how complicated it can go on and on. And Bob, putting off these conversations, it’s a decision in and of itself. It suggests we lack conviction about what we believe. There’s another scripture that I think speaks to this, “Faith by itself, if it is not accompanied by action, it’s dead.” And that’s from James 2:17.

Bob:
It kind of reminds me of the program that we made on procrastination.

Mary Jo:
And they can find that if they go back and look in the archives.

Bob:
Sure can. And by the way, you can do that just by going to christianfinancialpodcast.com. You can go look for that and listen to that one on your smartphone or on your computer, wherever you’d like. So let’s discuss some action steps, Mary Jo, that we can share with those listening and how to open up that conversation. I liked what you say to start out by first talking with your aging parents about money, if they’re still around.

Mary Jo:
It’s important to create that open and honest conversation with your parents about their financial situation, their desires, their concern, and especially about their fears as they age regarding their money before it’s too late, before an illness or dementia makes this impossible.

Bob:
So you’re just saying to start that open dialogue? I mean, that sounds pretty scary for a lot of folks, including me. Okay.

Mary Jo:
Well, yes. And so we’re going to look at some ideas to hopefully give them some help and some ideas to facilitate that conversation.

Bob:
Talking to your aging parents about finances can definitely be a source of anguish. It could create lots of uncertainty. Your family will definitely be in a stronger position if you do talk about it in advance rather than after the fact. And you know what we mean by after the fact.

Mary Jo:
That’s exactly right, Bob, and one of the things that, from a cost perspective, when you fail to plan, costs tend to increase and options become limited. That’s especially true with aging parents because dementia is so real, and it’s such a high probability. So you want to have all this in place and have these understandings before that happens.

Bob:
It’s a good idea, I would say before it happens, to even get with some legal counsel. This is where estate planning comes into play because estate planning is not just about setting up the will for after you’re gone, but it’s also about the power of attorneys, the medical power of attorneys. You can set up a trust, so if you’re incapacitated, you can put a corporate trustee in play there. So there’s a lot of things you can do, and you can talk to that about your children, so that pressure won’t be on them if one doesn’t want to act as the trustee. So there’s a lot of different ideas behind this. There are just too many to name, but we’re here to help you through these minefields. Two ways to accomplish this is help your parents by saying, you’ve done a good job. Don’t go in putting them down and then share the news about your own planning process if you’ve done it yourself.

Mary Jo:
I think that’s great advice, Bob. So you can start by letting them know how much you appreciate what they’ve done for you over the years and how they’ve helped you. Compliment them if they’ve done a good job where it’s appropriate, and especially if they’ve done a great job of saving over the years. That’s a great place to compliment them and get the conversation going. But if they struggled financially asked, do you have any concerns about your financial future?

Bob:
Another approach, Mary Jo, is to let them know that you have recently met with a financial planner of your own. And this process can remind you that you really don’t know much about their wishes and you can ask if they would feel comfortable sharing more about their financial goals, their end of life wishes, and their estate plans.

Mary Jo:
People are living longer than ever, and the risk of age related diseases is increasing at an alarming rate. So who do they want to help them with this if they become frail and incapacitated, or worse yet begin to suffer the effects of cognitive decline. Have they thought about that and what are their wishes in that regard?

Bob:
So as we get a little bit deeper into this and some more questions, another great question to ask is if they could design an end of life plan, what would it look like? And this should help get that ball rolling.

Mary Jo:
Absolutely. And in the Bible, God’s word commands us to honor our parents. In 1 Timothy 5:4, “But if she has children or grandchildren, their first responsibility is to show godliness at home and repay their parents by taking care of them. This is something that pleases God.” So part of honoring our parents is to support them in their old age.

Bob:
Just as it’s important to talk to your aging parents about their financial situation, it’s also just as equally important to include in your own children in discussions about family finances. So, if we’re in the middle, we can share with both.

Mary Jo:
Oh, absolutely.

Bob:
And another challenging discussion…

Mary Jo:
Talking to your kids about money is another challenging discussion. Bob, speaking about talking with our kids about money, during the 1990s, it just seemed like money grew on trees. We had a robust market, it was very much a bull market. Investment portfolios grew significantly. A lot of people used their home equity as a line of credit. This came to a screeching halt, however, after the market crashed in 2008. It seems now though that after years of a bull market more recently, we’re seeing some of these same signs that this cycle could repeat itself. The things that concerns me about this is the negative impact it has on young people who don’t have the business of wisdom gained in previous economic or market cycles. They haven’t lived through the downturn. So they’re not used to doing without, and students are getting credit card offers at young ages before they even have a job or a source of repayment. Students are using loans and credit cards to pay for the rising cost of a college education. So, this is already creating a hardship.

Bob:
Yeah. I’ll tell you what that credit might look like a great option to assist with college costs, but without a strong discipline that can create a financial crisis in the making. I’m just thinking about this. For young adults, the added burden of mounting student loan debt in an uncertain job market could be a nonstarter, and it could take many years to pay it off. I’ve seen this many times when I’m talking with those that are just getting out of college and trying to start something. They want to start something, but they have so much debt looming over them. Talking with your kids about managing credit and helping them to understand, don’t just go out there and take all those credit card offers. It’s really better to go cash if you can, and give them the opportunity to do so while they’re under your guidance is a great life lesson, because I’ll tell you, we don’t learn this in school.

Mary Jo:
No, they sure don’t. Financial illiteracy is rampant. Parents think their kids are getting the basics of personal finance in school, but this is just no longer the case. We learned about budget by balancing a checkbook, but kids today, they don’t even know what a checkbook is. In fact, according to a study from Visa USA from 2003, nearly half of young people think they are more likely to become millionaires by starring in a reality TV series than by working and learning how to budget and save wisely.

Bob:
Let’s make a deal.

Mary Jo:
Advertisers and credit card companies are targeting young people because they have spending influence. I’m not even sure I know what that is, but social media is making this all just worse.

Bob:
Oh, you know what it us. Come on. When you’re on the internet, and you’re going from site to site, it’s all targeting you because it knows what the last thing that you looked at is. We go look up a vacation to Florida, and the next 10 times on the internet, it’s going to be advertising vacations to Florida. Really, it’s never too early to have that family discussion about budgeting. Bottom line, it’s very necessary to have that. And we’re not saying that you can’t go buy some of the nicer things in life, but you really need to teach and be modeling that yourself and allow children that opportunity to even plan a budget. Maybe next time that you go to the grocery store, have your children plan it out. Say we’ve got $350 to spend here. Of course they may buy all candy and fruit loops, but if they’re 10, 11, or 12 years old, talk to them about that and help them to understand when we go to the grocery store, this is all we’ve got. Now, Mary Jo that’s today, where it’s so different. You’ve got the debit card, you’ve got the credit card, where it used to be this is the amount of cash you had and if you spent it all, it’s gone. So teach them that mom and dad have to work hard to keep everything in budget and have to work hard to provide. And that debt takes funds from other opportunities such as giving and saving and even those great family vacations that can create memories for a lifetime.

Mary Jo:
That’s so true, Bob, and I love the way you said we only have $350 to spend. So let’s break that down a little bit more. So we’ve got a week and $350. And so how many meals is that? So how much can we spend on each meal? And if dinner is going to cost the family $10, and that means we have seven for lunch and maybe five for breakfast.

Bob:
Okay. I’ll get my calculator out here. Just a second. We’ll say $350 divided by 21. Okay. And what is that about $16 a meal, right?

Mary Jo:
How big is that family? That’s more like a family of five, but it’s a great practice noNo matter what the family budget is. So it’s a way to just get the kids involved. And kids from families that never discussed money or established spending limits are often the first to get in financial trouble as young adults. They just assume that mom and dad will bail them out. I encourage you to give some thought to raising savvy, financial citizens. They’ll just be better people.

Bob:
Exactly. And we want to make sure that we talk to our kids about giving, because giving releases the bondage that greed has over us. So don’t just talk to them about money and budgeting and spending, but show them the joy of giving, get them involved in giving to missionaries or to the church, and think about how will you involve them in giving as well as the satisfaction of it. You’re their financial leader as the parent, so show your children how to be good and faithful stewards.

Mary Jo:
Growing up, you saw those banks that had spend, save, give. I always thought that that was a great way when kids started getting an allowance to teach them that, about giving, and how those three work together. Every family has a money history. So, we just want to encourage you to start the conversation, and talk money in a way that matters with the ones that matter most. Another scripture that we’ll leave you with, “Train up a child in the way he should go. And when he is old, he will not depart from it.” And that’s from Proverbs 22:6.

Bob:
We encourage you to listen in next week as we explore talking to your spouse about money and ways to have that money talk.

[DISCLOSURES]

Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.