Speaking about financial topics with family matters can be an uncomfortable conversation for parents and their children to have, even when those children have reached adulthood. However, talking over money may be essential for both kids and parents to know where the other stands fiscally.
According to a report by Fidelity Investments, parents and their adult children seem to have a disconnect regarding how their financial futures look. For instance, nearly a quarter of adult children surveyed think they will have to help support their parents at some point in the future. All but 3 percent of parents polled, though, indicated they don’t think this will be the case for them.
Another matter parents and their kids appear to differ on is how much inheritance children will receive from their parents. The study shows, on average, kids overestimate the amount of money they think they will receive from their parents by $100,000.
The difference in thoughts regarding finances could lead to many adult children to overspend, which could in turn lead them to need credit counseling services to repair their standing should they develop debt.
Have conversation to clarify where finances stand
To ensure everyone in a family is up to speed on exactly how much everyone has saved up and what they plan to do for future savings, being open and honest may serve parents and their children best.
Many baby boomers continue to delay retirement due to current financial restraints, and a number of their children may have their own fiscal problems due to the recession. Thus, laying all financial information on the table can serve both parties well.
“Getting more comfortable with these conversations is going to be really important,” said Kathleen Murphy, Fidelity’s president of personal investing. “The burden only gets bigger.”
With talk of the fiscal cliff growing among federal regulators, Murphy added that the end of 2012 offers a premier time for families to talk among themselves regarding money. Doing so can make sure all family members are set up well moving forward.