Creating Family Financial Awareness
August 14 is Financial Awareness Day. While you’ll probably see plenty of articles about getting your finances in order or raising financially literate kids, there’s another layer to financial awareness that often gets forgotten: planning for aging parents. I’m an only child of two middle-aged parents (don’t tell them I called them that) so it’s extremely important that I am aware of what their plans are for the future. I’d recommend you do the same with your loved ones.
I know what you’re thinking – No, you don’t need to ask the exact balance in your parent’s bank account to be more aware of their financial situation. Asking the right, sometimes uncomfortable, questions now can help all parties involved feel better prepared for the future.
Long Term Care – Knowing what, if any, long-term care coverage your loved ones have is a key part of planning for the future. The cost of long-term care can be astronomical, especially for an illness that could span out over several years. Another important piece of this conversation is understanding what your loved one’s wishes are. Are they open to moving into a nursing home or assisted living facility? Or, are they planning for you to be their primary caretaker?
Estate Documents – Cognitive and physical decline can happen quickly. Having the power of attorney documents in place for financial and medical decisions sooner rather than later are a crucial part of planning for the future. Ask questions like, ‘Who would you want to make hard medical decisions for you if needed?’ and, ‘Is there someone you would trust to handle your finances if you were unable?’
Final Wishes – While no one wants to imagine a world without their parents or loved ones present, there is value in discussing their final wishes. Maybe it’s a family heirloom that should be passed down to a niece, or a specific song that they want played at their funeral service. Having these conversations early can ensure that their wishes are known and planned for.
Financial Accounts – As mentioned earlier, having conversations with family about finances doesn’t mean that you’re asking for the balance of each bank or investment account. Rather, it’s important to ask where things are located and/or if there is someone specifically that your family member has worked with. In an age where everything is electronic, it is not as simple as it once was to track down statements or account holdings. Ask your parent or loved one if they keep a list of all of their accounts and log in information somewhere safe for you to find later when needed.
These conversations may seem uncomfortable, but they don’t have to be. Start with the basics, remember to start these conversations from a viewpoint of wanting to be more aware for the future, and as always, reach out to a CERTIFIED FINANCIAL PLANNER™ Professional if you need more guidance along the way.
Published in the Victoria Advocate
Sara Potts is a CFP® Professional and Operations Manager with KMH Wealth Management, LLC.