Parents and money: this is quite a sensitive topic, and I have been ‘unfortunate’ enough to go through this severally. From my experience, I think my mother still sees me as a little girl.
Forget about my years of experience in finance or the basic personal finance management skills we all have, and there is a sensitive cord you risk plucking when you start talking to your aging parents about their finances.
But it is a conversation we must have if you want to prepare and plan yourself mentally and financially to support them. Sooner or later, circumstances might force you into handling some expenses, and if you have no idea where to start, you might be on your way to accumulating a lot of debts.
Case in point: my maternal grandfather was the most organized in our family. I bet even his financial life was more organized than mine. I am not sure when he gave up some control of his personal finances to one of my uncles, but it helped keep his accounts up to date. And he was always on top of things, knowing what money is where and whatnot.
When he finally fell ill, settling the hospital bills and funeral expenses was a bit easier. My uncle had kept his NHIF payments up to date, his Sacco account was well funded, and the family did not have to do much to cater to all these expenses. Even my grandma was well cared for after his death because he had left enough money for this.
When I think about discussing finances with our aging parents, regardless of how sensitive that topic is, I think these are the kind of conversations we need to have. With my mum, the conversation is usually on issues like health insurance, what to do with retirement money, what to do after retirement to keep money coming in, any significant investments or purchases that need to happen before retirement, and what we can do to achieve that.
We have talked about estate planning at some point because we are also learning from my grandfather’s mistakes. This is the one thing he got wrong, I believe, not leaving a written will. But that’s a discussion for another day.
Situations to Consider
1. Well-Off Parents
If your parents are well-off, there is a chance that they have their affairs in order. I am talking about financial advisors, estate planning, etc. While well-off is a relative word, some parents might not be in the super-wealthy class but do well independently. I’d still consider that as well-off.
But we are still in an age where most African parents still think writing a will or even think about death is a bad omen. Others believe that the little property, investments, or money they have are not worth planning for. These assets end up as part of the Unclaimed Financial Assets Authority, especially if the beneficiaries are not aware of their existence.
So, even if your parents are well-off, it is still important to talk about their finances, future care plans, possible expenses, what accounts and investments they hold, and how to get in touch with their advisors and lawyers.
2. The Debt Situation
Because our parents still perceive us as children and should not bear the burden of their financial decision, it could be quite challenging to know about their debt situations. Some parents are even embarrassed to admit they have debts, even if that money educated you and your siblings.
The reality, though, is that they could be in debt and not tell anyone about it. You might not be liable for their debts in the unfortunate event of their death, but these debts will probably pass to their estate. In that case, the debts will have to be cleared before you and your siblings can get your inheritance.
For example, your parent has a bank loan and used the title deed as collateral. What happens if they pass on, no one has any idea about the loan, and the bank repossess the land?
With this, you can help them work with a budget and start working towards clearing their debts. The same will also give you and your siblings a workable perspective on managing their expenses or helping them get out of debt.
Learn more in a related post: Drowning in Debt? Here are 4 Debt Pay Off Strategies to Consider
3. The Health Situation
How is their health now, and are their hereditary illnesses that you are worried will crop as they age? Even if they are healthy now or have a diagnosis but can still work and manage their life and expenses, it is best to talk about their healthcare in advance.
Retirement homes are not that common in the African culture. We stay home with our parents, and family members find ways to make ends meet. In that case, talk to your siblings and parents and plan about their health care and other expenses in advance.
Also, senior homes and caregiving companies are coming up. Which option works best to ensure they have the right professionals by their side?
4. The Scattered Family
You all want what’s best for your parents, but what happens when you are all scattered? Someone is living outside the country, another sibling is in the big city, and others are in different counties.
And while most of our live parent’s upcountry, mostly surrounded by close family members, it does not mean we don’t worry about their wellbeing. Regardless of where everyone is, ensure you are all on the same page regarding your parent’s care and living situation as they age.
How to Talk to Aging Parents About Finances
Regardless of what your parent’s situation is, broach the money topic carefully. They are still alive, possibly healthy, earning their money and managing their finances, and the last thing you want is for them to think you want to take over control of their lives.
Timing is everything; otherwise, your whole plan will go down the drain. If you are having this conversation with your siblings, you should all be present and not busy with other activities. The same applies to your parents. Their mind needs to be free. Do not bombard them with taking over the management of their life when they are busy planning something or talking to their friends or relatives. Ensure they are in a space where they are comfortable and free to air their opinion.
2. Introduce the Topic Gently
How do you start the topic? Do not spruce up the whole idea on them.
An easy transition to the finance topic from a different one could work. One example is using current events, like the pandemic.
Or start by asking them for financial advice, then transition into how they would handle the situation if they were in your shoes and casually introduce the topic of retirement and how they have handled their finances so far.
Another example is starting a conversation about other people’s experiences, even people you know, and how their lives and financial status might have been affected by their parent’s aging.
3. And Take it Slow
A gentle introduction to the topic will get you somewhere, but if you want to know everything at once and start taking control over their bank and investment accounts and other assets, you might as well forget the whole issue. We have seen cases where kids kill their parents for the inheritance. Do not be surprised if your parents do not want to divulge all information during the first conversation.
Always keep in mind that they still have a mind of their own and are still independent. Yours is to know what is in place and what their plans might be. With time, as they start to see your point of view, you will learn all the necessary details.
4. What is the Outcome?
As much as the topic is all about numbers, ensure you focus on the outcome. What do they want during their retirement? Listen to their needs, opinions, and concerns, and work out the numbers to suit them.
Would they want to live with you or any of your siblings? Are they okay still staying upcountry and possibly having a caregiver? Are they hoping to keep working at the farm, and a few employees come in hand to help with the heavy farm work?