For some, money represents a symbol of success or security, while for others, it can represent fear, shame, or guilt. Conversations about money can also bring up feelings of inadequacy or judgment, particularly if there is a perceived power dynamic between family members involved in the discussion.
Additionally, financial circumstances can vary greatly between individuals and families so discussing finances can reveal disparities or create tension in relationships. These factors make it difficult for some to discuss money openly and honestly and may even lead to avoidance or discomfort when it comes to family finances.
Despite these challenges, it is important to have open and honest conversations about finances with your wider family, especially your adult children. By doing so, you can provide guidance and support to help them avoid financial mistakes, build healthy financial habits, and set them up for success in the future.
In this article, we will explore the reasons why it is important to maintain open communication and talk with your adult children about your finances to ensure you can continue to build generational wealth.
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1. Help your kids prepare for their future
Firstly, by talking to adult children about your finances you can be assured that you will be helping them to be better prepared for their own financial future. For example, sharing your own experiences and mistakes will allow you to help your children learn from your successes and failures. This can include discussing your own financial goals, how you created a budget, how you managed your debts, and how you invested your money.
It is important to help your kids prepare for their future and, by sharing this information, you can help them avoid making the same mistakes you did and set them on the path to financial success much earlier in their journey.
2. Build trust and understanding between generations
Secondly, discussing finances with adult children can help build trust and understanding in the relationship.
By being open and honest about your own financial situation, you can show your children that you trust them and value their opinion. This can help build a strong bond between parent and child and can create a safe space for future conversations about finances or other sensitive topics.
3. Prevent financial crises within the family
Thirdly, talking to adult children about finances can help prevent financial crises in the family.
By being proactive and discussing financial planning and potential emergencies, you can ensure that everyone is on the same page in the event of a crisis. This can include discussing potential health emergencies, job loss, or unexpected expenses.
By having a plan in place, you can help mitigate the financial impact of these events and ensure that everyone is prepared.
4. Navigate complex financial decisions
Fourthly, discussing finances with adult children can help them navigate complex financial decisions.
As your children grow older, they will likely encounter complex financial decisions such as buying a home, investing in the stock market, or managing a retirement account. By discussing these topics with your adult children, you can help them make informed decisions that align with their financial goals.
You can also help them understand the potential risks and rewards associated with different financial decisions and provide guidance on how to navigate these decisions successfully.
5. Develop good financial habits
Finally, talking to adult children about finances can help them develop good financial habits that will benefit them for the rest of their lives. Discussing the importance of saving, budgeting, and investing will help your children develop the skills they need to achieve financial success. You can also help them understand the importance of building good credit, paying off debts, and living within their means.
By starting these conversations early, being non-judgmental, and providing guidance and support, you will be on the right track to ensuring your whole family has the chance to live their best possible life.
To kickstart the conversation, why not invite your family to a Financial Planning session with one of our Financial Advisers?
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What you need to knowThis information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice regarding those matters and seek personal financial, tax and/or legal advice before acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.