Financial Focus: Be sure to discuss finances with your family | Independent perspectives
June is the month for effective communications. And it’s a good idea to recognize the importance of good communication because it plays a role in almost every aspect of life, including your finances. You’ll want to clearly communicate your financial goals to your loved ones, and you’ll want to hear theirs, too.
Let’s take a look at some of the communications you might have with your family members:
• Your spouse: You and your spouse may have different opinions on a range of financial matters – how much to save, how much to spend, how much debt you are comfortable with, and so on. Try to reach some kind of consensus on these issues. However, when it comes to investing, you don’t necessarily have to act in unison all the time. You may each have different investment styles – one of you may be more aggressive, willing to take more risk in exchange for potentially higher returns, while the other prefers to invest with a view to mitigating the risks. risks, even if it means accepting a lower return. Of course, nothing prevents each of you from pursuing your individual investment strategies in your own accounts – IRAs, 401 (k) and so on. Nonetheless, if you have common goals, especially a shared vision for your retirement lifestyle, you may all want to compromise in your investment choices. And this accommodation is even more necessary in your joint accounts.
• Your parents: If you ever get involved in your parents’ financial plans, which is very likely, you need to know in advance what to expect. It might not be the easiest conversation to have, but it is important. So, for example, ask your parents if they have an enduring power of attorney, which allows them to appoint someone to handle their financial affairs if they become physically or mentally incapable. You can also ask them if they have protected themselves against the potentially huge costs of long-term care, such as an extended stay in a nursing home. Otherwise, you could suggest that they contact a financial advisor, who can offer solutions. Once you start communicating about these matters, you may want to dig deeper into your parents’ estate plans to determine what other arrangements, if any, they have made. If it appears that their plans are not fully worked out, you can encourage them to contact an attorney who specializes in estate planning.
• Your adult children: Just as you talk to your parents about their estate plans, you will want to discuss the same topic with your own adult children. Let them know who you named as an enduring power of attorney, what’s in your will, and if you’ve established a living trust. If you are already working with a financial advisor and estate planning professional, make sure your kids know how to communicate with these people. Of course, you don’t have to limit your communications to estate plans. If you want to help your children financially, such as lending them money for a down payment on a house, let them know.
By discussing key financial issues with your loved ones, everyone benefits. So keep those lines of communication open.
This article was written by Edward Jones for your local financial advisor Edward Jones, Michael Paolino MBA, CFP, AAMS – 24 Salt Pond Rd, Unit D3, South Kingstown, RI 02879. Suite 401-783-7548; [email protected]