Have you had the ‘money talk’ with your family yet? Don’t put it off

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Talking about money is not easy for most people because there are so many emotions involved – pride, shame, and envy, to name a few. It becomes infinitely more difficult when it comes to talking to a loved one about money.

“Nobody taught us to talk about money, much less our families,” said certified financial planner Hannah Moore in an interview with CNBC’s American Greed.

Moore, president of Dallas-based Guiding Wealth, works with both retirees and people who are in what is known as the “accumulation phase.” She also trains financial planners. In any case, she said, conversation was key.

“These conversations are difficult and awkward, but they are incredibly important,” she said.

Failure to “have the conversation” can have serious consequences that leave families unable to meet basic needs or unprepared to deal with the financial twists and turns that run through virtually every life.

Moore spoke to “American Greed” about the basics of talking about money in different phases of life.

Never too young

“I’m going to have a 3-year-old next month,” said Moore. “There are fair monetary talks I can have with her.”

Of course, they are not going to talk about the differences between fixed and variable annuities. But Moore said a basic topic should be how to think about money and how to value it. Consider including young children in financial goals, such as buying a new household item or taking a vacation, to teach them the importance of saving, planning, and being patient.

Consider showing your children how to keep track of your checking and savings accounts so they understand the importance of managing money. If you are giving to charity, discuss this with them as well.

“It’s about passing on these values ​​that families have,” she said.

As they get older, there will inevitably be talks about saving for college – and paying for it. Having a clear understanding of how this works and what your family can afford is critical, especially at a time of rising tuition fees and falling student debt. Explain to your teen how loans and interest work.

You don’t have to stop here. As your kids grow up, keep the conversation going.

“It’s really just basic. Here’s what it means to invest. How to use your investment statement. Some of these wealth creation opportunities are really normalizing, ”said Moore.

Sandwich years

Many people care for small children and at the same time for aging parents – the so-called sandwich years. Again, communication is key.

A simple conversation with your parents can calm everyone, even if it’s hard to get started.

“There’s a lot of fear that drives this conversation. And so it really helps to get clarity,” said Moore. “A good first question is, do you have a plan and are you working with someone?”

The conversation doesn’t need to focus on their specific financial situation, although it can help raise a red flag if they don’t have a plan. But the most important thing to begin with is to understand their desires and what role they expect from you, if any.

“You just say do you have everything in one place? Or, if something should happen to you, where should I go? Is there a folder in your closet or do I have to call someone to get one? this information? “

To the parents, this conversation may feel like you are giving up some independence. After all, you are now leaning on people who have always relied on you. But it doesn’t have to be like that. When you make your wishes known, you are in control.

“My goal with my customers is that people age gracefully,” said Moore. “And that means for me that it is on their terms and therefore on their decisions.”

“Sure is nice”

Conversations will inevitably turn to the legacy you want to leave your loved ones.

Experts say that in adulthood it’s never too early to think about an inheritance plan, but Moore said that leaving it up to legal documents to communicate your plans to your heirs can create unnecessary misunderstandings.

“It’s not personable,” she said, so your intentions might not get through.

“We don’t want surprises. ‘Clear is friendly’ is a phrase I use with my customers,” she said.

“Make sure it’s very clear why you’re doing it [what you are doing]”, she said. “If you give less to one child than to the other, why do you do so? And really help keep those relationships going. “

At the very least, consider including a personal letter with your estate documents to explain your decisions to your heirs. Better yet, have a real conversation.

Couples therapy

While planning these open conversations with your parents and children, don’t forget about the lines of communication with your spouse or significant other.

Even the happiest couples will argue about money from time to time, but Moore said transparency will always pave the way.

“I’m just thinking of the importance of clarity, of understanding where you are,” she said.

As with parent-child conversations, the conversation should cement each person’s values.

“Do you want travel to be a really high priority? Is it Education for Your Children? She said. “We really show what we value in life.”

Then develop a clear picture of where you are financially.

“Do you have a lot of assets? Do you have a lot of student loan debt? Do you have a retirement plan? What does it look like? What does your picture look like?”

Moore said some couples she works with mix up their finances while others keep them separate. Regardless of this, it is important to be open to one another.

“Having an idea of ​​where you want to go together really brings you towards a common vision and goal.”

A tragic example

In extreme cases, not talking about money can be fatal.

Karl Karlsen, 61, has been sentenced to life imprisonment for the murder of his first wife Christina in 1991 and their adult son Levi in ​​2008.

Karlsen disguised both deaths as accidents, allowing him to collect hundreds of thousands of dollars in life insurance revenue and tens of thousands of dollars more in pensions for Levi’s daughters.

Many of the accounts were opened within a year of Levi’s death, on the pretext that Karl would take care of the granddaughters.

“None of the money ever went to the girls,” Levi’s younger sister Kati Reynolds told American Greed.

While the Karlsen family’s dysfunction clearly went well beyond an inability to speak honestly about money, it certainly didn’t help. Karlsen has apparently spent a majority of the money, but some is still missing.

“There is still money my brother wanted to give his children and rightly so,” Reynolds said. “You should have it.”

See how a father’s plan devastated three generations of his family. Watch an ALL NEW American Greed on Monday, July 12th at 10:00 PM ET / PT on CNBC.

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