Happy Thanksgiving Day!
This year both for today’s food cost and upcoming Christmas shopping we are facing increased inflation that has not been this high for 40 years.
During the fall holiday season, many families get together to enjoy dinner. Often the two subjects to avoid are politics and religion. These are often areas where people have very strong feelings and you will probably not change people’s minds. Surprisingly, a study by Wells Fargo discovered that the subject most difficult to talk about is personal finance. It rated at 44% difficulty, while politics scored 35% and religion was 32%.
Not surprisingly, the study shows that 71% of adults learned the importance of saving from their parents. Yet, barely more than one-third of today’s parents report discussing saving money with their children frequently.
Being on the same page as your spouse on money matters is very important.
We know that financial issues are one of the biggest reasons for divorce. If debt and savings are an area of conflict, it is important to try and resolve this before the busy holiday shopping season. Sometimes families decide instead of buying something for all of the older family members to have a Secret Santa drawing where you buy only for the name you pulled out of the hat. Maybe set a gift cost maximum so that family members do not go over their budgets.
College debt is a major challenge for many children today. It is causing Millennials to delay marriage and buying a house. Many of these same people will not receive a pension when they retire. All of these challenges will make their lives more difficult. Encourage these family members to save in their 401(k). Encourage them to at least contribute enough to get the whole employer match. It is hard to turn down free money. Sometimes I hear of parents gifting money to their children to fund a Roth. This way they get to have some retirement money growing without hurting the child’s cash flow.
If your children are ringing up excessive credit card debt, explain how much they will have to pay if they are only making the minimum payment. Maybe you can help them develop a budget to better understand their spending.
It is important for boomers to be able to discuss financial issues with their parents. Often, the parents may become confused as they age. If you observe that your parents are forgetting things, you may want to reach out for help. Maybe they need help tracking what bills are due. Sometimes they pay the same invoice more than once.
Older Americans are often the target of identity theft. Make sure your parents understand some of the most popular scams such as pretending to be the IRS and saying they will send the police if they do not immediately send money. The IRS will not just call; they send a series of letters by U.S. Post Office. They do not use email or send the police. Make sure no one gives their Social Security number to anyone who calls them.
It is important to be sensitive when you bring up financial issues with a family member. Do it in a private setting. If you need an excuse, blame it on your financial planner. You can say you were discussing these subjects with your planner and they thought it was important to go over them with family members. This talk may be the best gift you can give.
I hope all of you have the best holiday season possible.
Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.” If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement.com.