In this month’s edition of “Money Matters,” Scott talks about why it’s so important to talk to family members about finances and your future plans for your finances—even if that conversation may include some uncomfortable moments.

Money Matters: It’s Important to Discuss Finances with Family Members Transcript

0:00:00.3 CJ: WTIP is pleased to bring you another edition of Money Matters, a monthly feature intended to help us understand more about managing our finances. Scott Oeth is a certified financial planner and an adjunct professor. He works with many individuals and has taught retirement planning and wealth management strategies to hundreds of financial professionals, and Scott is joining us now by phone. Good morning, Scott.

0:00:25.0 Scott Oeth: Good morning, CJ.

0:00:26.3 CJ: Nice to chat with you again. So, we're going to talk about family financial conversations. Ooh, that sounds a little tricky but tell us why it's important to do it anyway.

0:00:39.4 Scott Oeth: Yeah, tricky for sure. You know, CJ, you and I have been having great conversations about money every month here on Money Matters for about the last five years, but believe it or not, many people find this to be a very difficult topic to talk about money, even with or maybe especially with those people that people are close to. It's amazing. I saw a study, Money in Relationships Survey by Financial Educators Council, and they found that over half of Americans indicated they're not comfortable talking about money with anyone, including their parents or their spouses. So, there's, you know, there's often a real fear about bringing up money as a topic, and it's one of those very touchy and emotionally charged subjects, but there can be, I think, many benefits and important reasons to do so. So, I should throw out CJ's standard disclosure that my compliance department requires. I put out there that, you know, we're just having a general conversation, and everyone should seek their own professional advice and do their own research. But I think, you know, like you say, I got that a chuckle in your voice as you're launching the intro. You know, money can be a touchy subject.

0:01:42.5 Scott Oeth: It can be one that people are maybe embarrassed to bring up. Maybe they have insecurities. Maybe there's a lot of power or control dynamics within a family. So, it can be tough. But, you know, going through the work to break the ice or pull back the curtain or whatever metaphor you want can lead to a lot of positives. You know, it can help avoid passing on bad habits, can tell important stories of family legacy, you know, get people on the same page. Maybe they're not fully in agreement but at least seek more of a level of understanding. So, there's those maybe softer qualitative type issues that can be important in terms of family dynamics. But also, very importantly, you know, the nuts and bolts of a situation, thinking about planning opportunities, avoiding missed opportunities, looking for ways that people might help each other or, you know, support financial goals within a family.

0:02:36.9 CJ: Yeah, and I can see, if you are talking about a spouse or a partner or whatever, if you have very different goals for your future and what you want to do with your money, that could be a big issue down the line.

0:02:52.0 Scott Oeth: For sure, CJ. You know, when you're talking about spouses, you know, people who are in a committed relationship or married, you know, as I've thought about it more and more, like not a very romantic point of view, but that's really one of the biggest business decisions you're ever going to make because it's not just about maybe how you're deploying resources, but about what types of career choices or business choices someone is making, how they're supported by the other. And then also the spending side, you know, and so it's really 360 around that whole cash flow of a family at spouse level. But we've talked in the past about children and kids and helping pass on important financial lessons. That's very valuable. More and more, I'm having a lot of these conversations in my office and working with families to talk about, you know, senior generations, Gen One, we might call it, you know, folks who are of retirement age, senior citizens, you know, their adult children, their grandkids, and trying to, you know, get conversation going on important topics between those levels of generations, which can have a lot of really nice benefits and also just important ones thinking about life's transitions and what's next within a family.

0:04:02.0 CJ: All right. So, what are some of the topics that you think would be valuable discussion topics for families? I mean, we've touched on a little bit of them. Can you elaborate a bit more on that?

0:04:12.8 Scott Oeth: Yeah, I mean, of course, there could be a lot to it, but I think at a basic level, kind of an understanding of where folks are within a family, across generations, you know, are people all right financially? You know, are they on track or are there places where some people could use some help or some support? And maybe there's ways that folks in the family are willing to help, you know, facilitate that. I think talking about big picture goals, you know, what would grandpa and grandma or mom and dad really like to do? What are they driving for? What's it all been about? You know, so those types of things are very important. Like I say, on the qualitative, I'm sorry, the quantitative and what I like to call the nuts-and-bolts side of a financial situation. And then, you know, I think it's wonderful and could be important, the more qualitative conversations, maybe the softer stuff. I can't tell you how many times, CJ, I've had someone when I'm in a meeting and this might be, you know, a grown adult in their 50s, 60s, and they tell me something that has stuck with them that they heard from their grandparents, you know, about a financial decision relating to the farm or a job or a business, you know, things like that.

0:05:22.9 Scott Oath: And those lessons, those stories can really, really stick. And I think that's an important thing. You don't necessarily need to be a financial advisor, an investment expert, a CPA, something like that to share stories and have those have a lot of impact. So, I think some of those conversation topics, you know, talking within a family about what does financial success really mean? What does it mean to you personally? Some people might be focused on numbers and accumulation, while other people and other families are more focused on experiences and lifestyle and their role in society. So, I think that's important to consider what financial lessons from previous generations do you find most valuable? I have to say, I've talked about this before, I've written about it, but my father talked a lot about money within our family. I think that was very valuable, and I think it's probably a big part of why I do this for a living. And I heard a lot about his father, my grandpa Oeth, you know, the way he was financially disciplined and the choices he made career wise. And so those things can really have a lasting impact.

0:06:26.7 Scott Oeth: But you're talking to family members, even younger ones, about what role do they see themselves playing in the family's financial picture, the family's legacy and asking questions, you know, how can we better educate? How can we better prepare that next generation for financial responsibility or improved communication? So, there's a lot of ways to take it. And every family is different. I think a famous Russian novel started off with some line about every family being successful, family being the same, but anyway, I'm getting over my head.

0:07:00.1 CJ: On that one. All right. Well, all right. So, because it can be difficult to bring these topics up and to just get started. So, any advice on how people can break the ice on this, if you will?

0:07:15.9 Scott Oeth: Yeah, I think, CJ, you'll see referenced sort of these very grandiose family financial meetings and things like that. That's a great idea. But I think probably most importantly is, you know, start early, start small, natural conversations, maybe somewhat informal, but purposely intentional, especially by senior generations, you know, telling those stories, you know, making lessons and being consistent in the messaging there is a good starting point. So, this is something that we can talk about within our family and especially where it might be very important on a functional level. But that next level, it is nice. And I've helped facilitate these. I think it is a good idea. You know, more formal conversations where a time is decided and location. Maybe it's important to have a location that's somewhat neutral. If there is that very strong power dynamic in a family, have an agenda, allow everyone to have some time to share and speak. And I'll post this and share some ideas. And there's lots of good ones out there about topics for family financial meetings. And I will say, I think for that type of situation, it can help maybe bring in someone from the outside to help facilitate, maybe referee a bit.

0:08:37.2 Scott Oeth: So, if you have a trusted accountant, financial advisor, attorney, something like that. And I'll admit, CJ, sometimes I'm a little bit nervous, even though I might have had many, many conversations with one family member or one generation of a family. I kind of wonder what I'm stepping into, as we go on these types of meetings, but I'll say, I think it usually ends up being a fun and rewarding experience, and a third-party facilitator can help.

0:09:05.0 CJ: All right. I'm thinking, I'm sitting here thinking this would be a great topic if you are thinking you're getting serious about somebody you're dating to just sort of broach this topic early before the commitment is made, right?

0:09:23.8 Scott Oeth: I think so. It's probably, I don't know if anyone's ever accused me of being a great romantic. This is not helping the cause, but I think it's important. You can like someone, you can love someone, there can be physical attraction, you can get along well together. All those things are wonderful. That's what we like to think about. That's what the movies are about, and, you know, the cards and all that great, great stuff, but the reality is we look at what causes problems in relationships and marriages between spouses and money is right up there. So, it is important to talk about it before you take those next steps in the relationship.

0:10:07.9 CJ: All right, Scott Oeth, financial planner and therapist, couples therapist. Scott, thanks so much for this. We really appreciate these monthly check-ins.

0:10:20.9 Scott Oeth: Thanks, CJ

0:10:21.9 CJ: Okay. Scott Oeth there, you'll be talking finances with Scott on the first Wednesday of the month on North Shore Morning.