Solutions for dealing with three sticky financial situations.
Your folks ask nosy questions about how much your new house cost or whether you can afford such an expensive car. How do you respond?
If you wish to give this information to your parents, do it. Maybe you want to reassure them of your financial stability or merely share the details of your life. But if such queries press your buttons or make you feel defensive, go ahead and keep those dollar figures to yourself. “Moms and dads are bound to ask about what’s going on in your life and offer advice,” says Stephen Betchen, a marriage and family therapist in Cherry Hill, New Jersey, and the author of Magnetic Partners ($19, amazon.com). “You don’t have to listen, but their job as parents is to help steer you away from disaster. So they may get anxious when you’re in a high-stakes situation, such as buying a house.”
Says Catherine Newman, Real Simple’s etiquette columnist: “If your mom mentions that you’re spending a lot of money, simply reply, ‘Oh, it feels so good to have a little money right now to buy the things I really want,’ which makes the point that you can afford the splurge in question.” Or, if your financial situation is more precarious, you can direct the conversation to the ways in which your new house or car is a wise financial investment: “By buying a crossover, we won’t have to get a bigger car in a few years when we have your second grandchild.” Conclude by “thanking your parents for their concern—and reminding them that you were raised well and that making your own decisions is part of being an adult,” says Betchen. That’s a respectful way of saying, “Next subject, please.”
Your parents may need long-term health care or assisted living in the near future. Can you demand details about their finances?
No, you can’t demand that they share this information. But you have the right to ask for it. Just be aware that this talk will not be easy to have. “Some people, as they age, get more controlling and anxious and therefore more intent on protecting their privacy,” says Betchen. So be mindful of your tone. “Don’t be accusatory or talk in a way that will shame your parents,” says Betchen. One graceful method of broaching the topic is to ask for advice rather than for information, says Nicole Francis, a New York City–based certified financial planner: “Try saying to them, ‘I’m thinking about sitting down with a financial adviser to talk about my will and long-term-care insurance. Do you and Dad have any of that stuff?’” That may prompt them to divulge their own plans.
Once the dialogue has begun, you should feel more comfortable asking them for copies of key documents—their wills, living wills, health-care proxies, and powers of attorney, as well as insurance policies and bank and retirement-account statements. Tell them, “I need to know what you want to happen so that I can make sure your wishes are honored,” says Brad Klontz, Psy.D., a certified financial planner and clinical psychologist based in Kauai, Hawaii, and a coauthor of Mind Over Money ($10, amazon.com). If Mom or Dad balks at or evades the conversation, don’t give up, says Francis. Wait six months and try again.
You’re asking your parents for some money to refinance credit-card debt or to make payments on student loans. How much do they need to know about your financial situation?
Be very specific about why you want to borrow the money, how you got into this bind, and how you’re going to pay them back, says Mahnaz Mahdavi, Ph.D., a professor of economics and the director of the Center for Women and Financial Independence at Smith College, in Northampton, Massachusetts: “Even if they’re giving you a gift, your parents will appreciate your discussing a plan for using the money and how it fits into your overall finances.”
A good rule of thumb, says Klontz, is to offer any information that you would give to a bank or another third-party lender. That means handing your parents your most recent bank statements and a detailed account of your assets and liabilities.
Make sure you’re equally transparent when it comes to the terms of the agreement by hiring an attorney to draw up a promissory note, says Francis: “That way, you avoid any potential misunderstandings later, which can harm your relationship.” If you don’t want to shell out for a lawyer, draw up your own agreement. You can find legally binding templates for such documents at office supply stores and at nolo.org.