Smart Money Podcast: When and How to Talk to Your Parents About Their Finances
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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how to have crucial financial discussions with your parents while preserving their dignity and security.
In this Nerdy Book Club episode, personal finance Nerd Kim Palmer talks with journalist Cameron Huddleston about insights from her book “Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances.” In their discussion, Huddleston shares her personal journey of stepping up to manage her mother's finances after an Alzheimer's diagnosis and offers guidance on how to have critical discussions about money matters with aging parents.
Huddleston breaks down why it’s important to understand different aspects of your parents’ financial situation, including their income sources, bills, debts and investments. She also provides strategies on initiating difficult financial conversations in a respectful, loving manner and shares how to spot changes in your parents' financial situation or cognitive abilities. You’ll walk away with tips for timing your conversations and strategies for broaching the subject, even if your parents come from a generation that is typically reluctant to talk to their kids about money.
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Episode transcript
Sean Pyles: Welcome to the NerdWallet Smart Money podcast. I'm Sean Pyles. We have a special episode in store for you today. Regular Smart Money guest and personal finance Nerd Kim Palmer is kicking off the next episode in our Nerdy Book Club series. Kim, welcome back to Smart Money.
Kim Palmer: Thank you so much for having me.
Sean Pyles: So, who are you talking with this episode?
Kim Palmer: I am speaking with Cameron Huddleston. She is the author of “Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances.” She writes about how to broach those difficult topics and also why it's important to.
Sean Pyles: Well, I will let you take things from here.
Kim Palmer: Perfect. Thank you. Cameron, welcome to Smart Money.
Cameron Huddleston: Thanks so much for having me.
Kim Palmer: Of course. I wanted to start by giving listeners some context around why you were personally inspired to write this book. Could you give us a little bit of your story with your mom and how you came to take care of her finances?
Cameron Huddleston: Sure, of course. There's a personal story because who else would write a book of telling you to talk to your parents about their finances? It's such an awkward conversation, at least that's what a lot of people think. I have been a personal finance journalist for more than 20 years, but it was that experience with my mother that prompted me to write this book. When I was 35 and she was 65, she was diagnosed with Alzheimer's disease and she was living on her own because she and my father had gotten divorced several years prior to that, and actually my father had passed away. He actually was in a second marriage and had passed away without a will, even though he was an attorney and should have known better. And that also played a role in me wanting to write this book. But I found myself in a situation where I was having to get involved with my mom's care and finances, but I didn't have any details about her finances, and she was starting to forget those details herself.
And so, I had to play detective because we had not had any detailed conversations about her finances before she started having issues with her memory. We did have a conversation before she got an Alzheimer's diagnosis, about the need for long-term care insurance. I'd encouraged her to look into getting a policy to help pay for long-term care if she ever needed it. And, unfortunately, she was not able to get long-term care insurance because of another pre-existing condition that she had. Like I said, she had not been diagnosed with Alzheimer's at that point, but she was too high-risk. And looking back, I can say, well, I should have used that opportunity to talk to her and say, "Well, Mom, you can't get long-term care insurance. How would you pay for care if you needed it? What sort of care do you want? Let's look at your financial situation," but I didn't.
I totally dropped the ball there. Even though I was a personal finance journalist, I didn't realize it was a conversation I needed to have. And then when I did have to get involved, I had to scramble to make sure she had all the necessary legal documents to give me the legal right to make financial and medical decisions for her. And like I said, I had to play detective to get the information about her finances that I needed, and I realized this was a mistake. And so, I decided I wanted to help other people recognize the importance of having these conversations, why they need to have them before there's an emergency. And I wanted to help give people ways to start the conversation naturally and give them some tips on what to do if your parents aren't willing to talk because not all parents want to share this sort of information.
Kim Palmer: Exactly. I want to talk to you more about that in a bit. One thing that really struck me reading your book, first of all, you sharing your personal story is so powerful, and just how common it is. Why is it, do you think, that so many of us wait till it's too late almost to talk with our parents about money and then it becomes so much more complicated?
Cameron Huddleston: Either you don't realize that it's a conversation you need to have or, for a lot of us, we're afraid to have the conversation for a variety of reasons. Money might have been a taboo topic in our household while we were growing up, or we might recognize that our parents haven't done such a good job of managing their finances, and so we don't want to bring up the topic because we don't want to embarrass them. Talking about finances and estate planning can bring up the issue of aging and death, which a lot of people are reluctant to discuss, and some of us are just afraid that if we bring up the topic, our parents are going to get mad at us and we don't want to create a rift in our relationship with our parents. And so, we play out all these scenarios in our head about how bad it's going to go. But I can tell you that oftentimes it's not going to go nearly as bad as we might think, as long as we approach these conversations in the right way, out of love and respect for our parents.
Kim Palmer: Absolutely, it sounds like we have to really face some of those fears in order to get these conversations going. One fear that stood out to me that you write about is that we're worried our parents will think that we're greedy or nosy and have maybe ulterior motives in asking them all of these personal questions.
Cameron Huddleston: Certainly, especially if we're trying to find out, for example, if our parents have a will or a trust, something that spells out who gets what when they die. And I can tell you right now, the wrong way to start that conversation is, "Do you have a will? Because I want to know what I'm getting." That is going to make you appear greedy for sure, and so the goal in having these conversations is not to figure out what you might be getting because you should assume you're not getting anything.
If you happen to get something, that's your parents' decision and also depends on their financial status, but the goal is to find out, do they even have those estate planning documents? Do they have their wishes in writing? And all adults need to put their wishes in writing. They need to have a will or a trust that spells out who gets what when they die because if your parents die without a will, state law determines who gets what. You need to find out, do they have power of attorney documents, a financial power of attorney document, health care power of attorney, advanced directive or living wills? And so the key is not to say, "Well, what am I getting?" But what are your wishes and are your wishes in writing? This lets your parents know that you are looking out for their best interests, not yours.
Kim Palmer: Right, exactly. Well, let's walk through some of those most important talks to have, the things that you really should know about your parents' finances. You just mentioned some of them. One thing I noted is that you want to first start, you write, with just reviewing sources of income, the estate planning documents that you mentioned, an overview of all the accounts. What are some of the other big things you want to be sure you understand?
Cameron Huddleston: So, I'm going to harp on the estate planning documents just a little bit more because they are so important. As I mentioned, a will or a trust is going to spell out who gets what when you die, but I think even more important than that is the power of attorney document, which lets you name someone to make financial decisions for you if you can't. This has to be drafted and signed while you are still mentally competent. And so for example, if Mom has had a stroke and she's no longer competent to manage her finances on her own, you can't just go and start signing your name on her checks. You can't access her bank account; you can't talk to her insurance providers. You have to be named her power of attorney. Already you have to have that document. Otherwise, you're going to have to go to court to be named your parent's conservator, and that can take several months and cost thousands of dollars.
You want to make sure your parents have a health care power of attorney. It's also called a health care or medical proxy or a health care agent. This is someone who can make medical decisions for your parent if they can't. Do they have an advanced directive or living will that spells out what sort of end-of-life medical treatment they do or do not want? All of these documents have to be signed while you are still mentally competent in order for them to be valid. So you want to find out, do they have these documents, and where are they located? And if they just say, "Yeah, we have them," well, you need to know where because if you can't find them, they're not going to do you any good. Sources of income, that's important to know. Are your parents planning on relying only on Social Security benefits, or do they have some other sources of retirement income such as a pension or retirement savings?
If they're relying only on Social Security, that might be a sign that they're not going to have enough money to live comfortably in retirement, depending on their overall financial situation. So, it can lead to some other conversations you might need to have. You also want to find out what sort of bills do they regularly pay? This is for emergency planning. Again, let's go back to that stroke scenario with Mom. Mom has had a stroke, she's in the hospital, you need to make sure the bills are being paid while she's in the hospital or if she has to be transferred to a skilled nursing facility for rehabilitation. Well, if you don't even know what bills she has or how she pays them, you can't make sure the bills are getting paid. So, it's an easy enough question to ask. If something were to happen to you, how can I make sure the bills continue to get paid?
Are they set up to be paid automatically, or are you writing checks? And then you want to dig a little bit deeper — do they have any debt? You don't have to know how much debt they owe, but are they still paying a mortgage? Are they still paying on student loans that they took out for you or for your siblings or for themselves? Do they have credit card debt? What sort of investments do they have? Do they have other property other than their home, real estate investments? And then even very specific details, their Social Security number, their Medicare or their insurance numbers or if they have Medicaid, what sort of veteran benefits are they receiving? The more details you can get, the better. If you do have to step into a caregiving role, you're going to need all that information. And when your parents pass away, if you happen to be their executor or their trustee, you need to know what accounts and assets they have. Otherwise, again, you're going to be playing detective, and that's the last thing you want to do when you're dealing with the loss of a parent.
Kim Palmer: I have to admit, as someone who has not yet had all of these conversations with my parents, it feels so overwhelming, but it sounds like you're saying it will be less overwhelming if you do it now versus waiting.
Cameron Huddleston: It will definitely be less overwhelming, and I want to let people know, this is not a one-time conversation. You don't want to sit your parents down and grill them for hours about their finances. That's going to be too much for you; it's going to be too much for them. This is a series of conversations, but one thing that you can certainly do is instead of asking them to tell you all of these details, you could ask them to write these details down for you and to store them someplace safe with those legal documents and tell you when and how to access that list of information.
The benefit to doing this is it allows your parents to maintain control, and a lot of times that's the issue with these conversations. Parents don't want to feel like they're giving up control. They don't like the idea of the role reversal. They don't like the idea that maybe someday their children are going to have to step in and help them. And so by letting them maintain control over that information until it's absolutely necessary for you, it can make this an easier way to get this conversation going.
Kim Palmer: Well, that really leads me to my next question for you, which is, how do you respect their privacy during this? Are there aspects of their finances that we can leave alone, we don't need to know about it? I know you did mention with debt for example, maybe you don't need to know every single detail about the debt. What can we say, "OK, this is just private and we don't have to know everything about this part of your finances"?
Cameron Huddleston: Well, so you do have to remember that it is your parents' decision to let you know how much they want you to know. And so, you don't want to push too hard. It's OK to say, "Hey, could you share some information with me?" And if they balk at first, then you find a different way to approach it or you bring it up again and let them know that it would help you to have some information in case you do have to get involved. But like I said, you don't have to know exactly how much they have in debt, you don't have to know exactly how much they have in their retirement savings account, you don't have to know exactly how much money is coming in through various sources of income.
It's just a good idea to have some general knowledge about these things. Are they still carrying some debt? Do they have a source of retirement savings? What are their various sources of income that they will have in retirement or as they get older? But they can decide how much information they are willing to share. Again, if they're willing to make that list and put everything on that list, then they can keep it private until you absolutely need to have that information.
Kim Palmer: That makes sense. What about the timing? Should you talk about what would maybe trigger that next phase where you are helping them manage their money more directly? Is that an aspect that you should talk through in advance, or is it something that just becomes obvious?
Cameron Huddleston: So, it can depend on your parents. If you have parents who are reluctant to share information with you, actually, this is one of the strategies that you can use. You can say, "Look, I understand that it might feel a little bit uncomfortable to share this information with me now. I understand that you know, consider this to be private information, but let's talk about some circumstances when you might be willing to share this information." You might be willing to say, "If I am diagnosed with dementia or if I have some sort of serious accident or if I have a stroke or some other health issue," if you can get your parents to pinpoint those particular situations when they might be willing to share more information with you or when you could access the information that they're going to provide for you in a list, and then write down those situations so that you can always go back and say, "Hey, we agree that I could get involved. I could get this information when this happens."
So, that's one way to do it. Another thing is to keep a lookout for signs that your parents are needing help with their finances, and here are a few key signs. So, let's say that your parents' home is typically very neat and organized, you don't see piles of bills lying around and the laundry's not sitting out scattered, but you're noticing a change. And now there is a big pile of unopened mail sitting on the dining room table, the house is not clean anymore, laundry is piling up. This could be a sign that your parents are experiencing some sort of cognitive decline and they're having trouble staying on top of those daily tasks. And if there is cognitive decline, that means that they are most likely having trouble staying on top of their finances, so that's a good sign to look for.
If you are seeing a change in their spending behavior, maybe they were always willing to pick up the tab when you went out to dinner together and now they're asking if you can pay for them, or maybe they're complaining about not having the resources to do things that they used to do, or maybe they're complaining that it's hard for them to pay their bills. This could be a sign that something is going on. It could possibly be even a sign that they are victims of fraud and exploitation and they've lost a lot of money to a scammer, or perhaps they're spending a lot more than they used to.
There's a new car in the driveway, there's lots of new clothes in the closet, there are lots of new things that are appearing in your parents' house. Again, this can also be a sign of a change in their cognitive ability. If someone has dementia, then they might be spending a lot more freely than they used to because their financial decision-making ability is impacted. So if you notice changes in behavior, you need to investigate. Don't just assume that this is a normal part of aging.
Kim Palmer: That's a great point. You have a whole chapter on conversation starters, which I found really eye-opening because I think a lot of us do wait until, say, the holidays when we're all together, and then you might bring this topic up, but you advise against doing that, against bringing up the topic during the holidays, choosing a neutral time. Tell us when is it a good time to start the conversation, and what's the best way to start? I love your idea of starting with a story or you see something in the news, for example.
Cameron Huddleston: Stories are a great way to start these conversations because a lot of us have stories, whether it's a story about someone we know who had to get involved with their parents' finances, perhaps in a caregiving role, or someone who lost a parent who died without a will or maybe someone who lost a parent and that parent had done really great planning and how easy it made things for those who were left behind. So, you can use a story or if you don't have your own story, like you said, an article, "Hey, I just read this article in NerdWallet about the increase in scams, and Mom and Dad, I wanted you to be aware of some of these scams that I've heard about." Scams are a great way to start the conversation, by the way, because all of us can be targeted by scammers. And so, you can share articles that you read about scams, and then you can start talking to them more about other ways that they could protect their finances.
For example, offering to help them get a copy of their credit report for free from annualcreditreport.com or helping them set up online bill payment if they haven't done it already, so that they're not sticking checks in the mailbox, which can be stolen. Actually, there's been a surge in check washing fraud recently, and so you can use the story, the articles. If you're still relatively young, you can ask your parents for advice because parents love giving their kids advice, and this avoids that role reversal. You can say, for example, "As you know, Mom and Dad, we're expecting our first child; should I have life insurance at this point? Do you think I need to have a will now because I've got a child to support and I need to make sure that everything is lined up that I have a guardian named?"
And so, you can ask your parents for advice, and their response is going to give you clues about what sort of planning they've done, and if your parents are a lot older and maybe you don't have the closest relationship with them, this might sound a little bit odd, but it can work. You can actually send them an invitation and put it in writing so that they have time to think about it. But don't do it like the old school, you're back in elementary school, and do you want to be at my girlfriends circle, yes or no. You want to tell them that this conversation is going to happen, but then they can choose when it's going to happen. So, don't give them the option to have the conversation; just simply say, "I'd like to talk to you about this. Let me know when it would be a good time for us to sit down together and have a conversation." So, lots of different ways to approach these conversations without it being too awkward.
Kim Palmer: Yes, I like how you say don't give ultimatums, don't focus on the negative. Try to keep it positive.
Cameron Huddleston: Yes.
Kim Palmer: And many people have siblings, of course. Is this something you want to bring them into as well? You want to make sure no one feels left out, right?
Cameron Huddleston: Certainly, and unfortunately, sometimes the conversations with siblings can be more difficult than the conversations with parents because those sibling rivalries can surface when it comes to Mom and Dad and getting involved in their finances and in their care. And so, what you don't want to do is initiate these conversations with your parents without talking to your siblings first because they might think that you're going behind their backs to get in good with Mom and Dad, so that you get everything when they're gone. Not that you're necessarily trying to do that, but your siblings might think that you are, especially if you don't have a great relationship with them already.
And so, I encourage people to reach out to their siblings before talking to their parents, set up a meeting with them, whether it's a phone call or FaceTime or in person if you can do that, and let your siblings know, "Hey, look, I think it would be a good idea to start talking to Mom and Dad about their finances, about what their wishes are, about whether they want us to be involved and what sort of involvement they want from us," and give your siblings a chance to talk. You don't want to look like you're controlling the whole conversation.
Let them know, "What do you think? What do you think?" And then you can wait till the end and share your opinions, but you want to let your siblings know, "Hey, the goal here is to do what's best for Mom and Dad, so whatever issues we might have, we need to put them aside, and we need to decide how we're going to approach this conversation with Mom and Dad. Is it going to be all of us or just some of us, maybe just one of us? When do we want to do it? What approach do we want to use? Do we want to use a story? Do we want to go and ask them for advice? Do we want to bring in a third party to help us out?"
Maybe it's asking a family friend or if they have a place of worship, reaching out to their worship leader to get involved, or maybe even if they work with an attorney or a financial advisor, reaching out to that professional and saying, "Hey, we really want to have a conversation with Mom and Dad; do you think you can help facilitate that conversation?" And so, talk with your siblings before talking to your parents, so all of you can get on the same page.
Kim Palmer: And what are your options if your parents just really don't want to have these discussions with you? I think a lot of maybe boomer parents especially might have grown up with the idea that, "You don't talk about money with your kids. It's just not something that's done," so what are your options if you're in that situation?
Cameron Huddleston: So the first thing I say is, you need to start trying to have these conversations as soon as possible tomorrow. Start tomorrow because sometimes it can take time to get through to parents. I have a friend who has been trying for years to get her parents to share even the slightest bit of information, and finally they have agreed to start sharing some information with her because she has been trying for years to get through to them. And so, sometimes it just might take you attempting and attempting and attempting time after time to get them to have these conversations. You can try different approaches. Maybe they don't want to have this conversation because they feel it's private information, so you pick an approach that is the least likely to put them on edge. And so, maybe it's bringing up the topic of scams and sharing with them articles about scams that you're seeing circulating.
Or maybe it's just asking them about what sort of legacy they want to leave or even asking them about their past. “Mom and Dad, I want to hear some more stories about what it was like for you growing up,” and then maybe you can say, "What was it like in your house when it came to money? Was it something that you discussed?" Getting your parents to share that history with you might open the doors to having some conversations about where they stand now financially, but if they're unwilling after many attempts, then like I mentioned, getting a third party involved can help, maybe reaching out to one of their siblings to encourage them to talk to you, a family friend, a professional they work with or a member of the clergy, encouraging them to have these conversations, that can sometimes work because they might be more willing to listen to the advice of a peer or a professional than their own child.
Kim Palmer: And if your parents do want you to step in and help manage their finances, is there a specific digital system you recommend or any kind of organizational approach that you think works best, or does everyone kind of have to figure out their own system?
Cameron Huddleston: I think, like anything when it comes to your finances, you need to figure out the system that works best for you. Certainly, if you are going to be playing a very active role in your parents' finances, like I had to do with my mother, you want to be able to have online access if you can to those accounts, and so knowing the usernames and passwords so that you can log in to the bank account and the credit card accounts and the other accounts to make sure everything is, everything is OK.
The variety of services out there, full disclosure, I happen to work for one of those services, it's called Carefull, and Carefull is an account monitoring service that you can link to bank, credit card and investment accounts. There's credit identity monitoring, and if the older adult signs up for the service themselves, they can name family members as trusted contacts and give them view-only access. If you're signing up for a parent and you already have those usernames and passwords, you can use it to see all those accounts in one place and get alerts when there are unusual transactions or money mistakes. And so, there are a lot of options out there for you. You just have to figure out what works best for you and your parents and what you're all comfortable with.
Kim Palmer: And you mentioned scams; I know at one point you had to actively protect your mom from predatory phone calls. Are there specific things we can do — if we're doing nothing else today, is there something specific we can do to make sure our parents aren't falling victim to scams?
Cameron Huddleston: So, it's so important to keep those lines of communication open with your parents. Whenever you hear about scams, let them know, but because scammers are always coming up with new stories, really the best thing that you can do is alert them to scam red flags, and there are a few key ones. If you get a phone call or a text message or an email out of the blue and you are asked to make a payment on the spot or provide personal information on the spot, it's typically a scam, especially if you're being asked to make a payment with a gift card or cryptocurrency or a wire transfer or a peer-to-peer payment app such as Zelle or Venmo, scammers ask for that type of payment.
A government agency, the IRS, a reputable business, it's not going to ask you to make a payment with a gift card, and so that's a big red flag of a scam. In fact, if you get a call or an email or a text message from a government agency, it's a scam because government agencies typically communicate by mail. And so if your parents are not sure, ask them to reach out to you or ask them to reach out to their bank or some financial professional they work with, get that second opinion before they take any action because scammers make you feel like there's this sense of urgency and that you have to act right away without thinking.
Kim Palmer: It's so important. Thank you so much, Cameron, for being on our podcast. Do you have any final thoughts to share on what you'd like listeners to take away from your book?
Cameron Huddleston: I think it's important to have these conversations sooner rather than later because it can take time to get through to parents, but the sooner you start having these conversations, the sooner you can start planning, the sooner you'll be able to find out whether your parents expect you to play a role in their finances and their care as they get older, and that might mean that you have to make some adjustments to your own finances, but really, if you don't have these conversations, the consequences can be pretty awful. You might have to go to court to become your parent's conservator or guardian, or you might discover that your parents have died without a will and now you and your siblings are in court fighting over who's going to get what. And so, really the consequences of not talking are much worse than the awkwardness that you might experience, but might not experience by having these conversations.
Kim Palmer: Thank you so much.
Sean Pyles: And that’s all we have for this episode. To share your thoughts on talking about finances with your family, shoot us an email at [email protected].
Kim Palmer: Visit nerdwallet.com/podcast for more info on this episode, and remember to subscribe, rate and review us wherever you're getting this podcast.
Sean Pyles: This episode was produced by Kim Palmer and myself. Liz Weston helped with editing. Kevin Tidmarsh mixed our audio, and a big thank-you to the folks on the NerdWallet copy desk for all their help.
Kim Palmer: And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sean Pyles: And with that said, until next time, turn to the Nerds.
