We Told Our Young Adult Kids All About Our Money — Here’s Why

Finally, just days before sitting our kids down to talk, I learned that a high school classmate’s wife had died in her sleep. She was only 52. Hearing that news reinforced our decision to tell our daughters about our finances now.

As I see it, these conversations can’t wait until parents reach some arbitrary definition of “old.” They need to happen when parents are still relatively young, but the kids are mature enough to receive the information and be prepared for worst-case scenarios.

Financial advisers agree. “The conversation usually should start relatively early when the adult children are in their 20s, because accidents may happen to the parents even though the parents may only be in their 40s or 50s,” says Daniel Lash, a partner at VLP Financial Advisors in Vienna, Virginia. “It certainly becomes more important after the parents retire and now the adult children are in their 30s or 40s.”

What we told our kids

We started off by telling our daughters what steps to take if my husband and I die at the same time — information they need to know because we’ve designated each other as primary executors but assigned them as alternate executors for our estate, meaning they would have to handle our assets and accounts.

Because they rely on us for financial support, we shared what resources would be available to them. We told them the value of our life insurance policies, the process for collecting death benefits, and how much we have in our retirement and brokerage accounts, of which they are beneficiaries.

We said our will states that everything will be divided evenly among them and their 13-year-old brother, Alexander, who wasn’t at the table because we felt he’s too young to play a role in our finances. (We’ve shared general information with him, including ballpark amounts for our income and household expenses.) We also said that the person we appointed to be their brother’s guardian would manage any money he receives until he’s 22 or graduates from college or vocational school, whichever is first.

Then, we told our daughters what they would need to know about our finances if we were unable to manage them on our own because of a health issue or cognitive decline. We listed all the monthly bills we pay and all the accounts we have. We told them we have enough savings to cover the cost of long-term care and that we don’t expect them to provide hands-on care for us. In fact, I would prefer professional care in an assisted living or memory care facility if my husband isn’t around to help care for me.

We explained that as our alternate health care surrogates and agents under power of attorney, they will be able to make medical and financial decisions for their dad and me if one of us is no longer around to take care of the other.

We also showed them where our estate planning documents — our will, living will and power of attorney — are located, along with our house’s deed, car titles, Social Security cards, passports, marriage certificates and birth certificates. 

Everything we discussed, we had already put in writing for our daughters. Still, one of them took notes during the talk, and both had lots of questions. In all, the conversation lasted more than two hours.

How to talk about your finances with your kids

Before speaking to your children, determine what information you want to share with them. This may require you to take an inventory of your finances, check beneficiary designations on accounts, and meet with an attorney to draft estate planning documents, such as a will and powers of attorney, if you haven’t done so already.

Once you’ve decided what information to share, consider rehearsing what you plan to tell your children and anticipating what questions they might have, says John Cooper, senior private client adviser with Greenwood Capital in Greenwood, South Carolina. He also suggests giving your children an opportunity to prepare by letting them know you want to have a family money talk.

You don’t have to tell your kids as much as we told ours. You could start small by letting them know what financial accounts you have without disclosing dollar amounts, if that makes you more comfortable. “Some information is better than no information,” says Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. 

However, the more information you’re willing to share, the better prepared your children will be if they have to get involved with your finances in an emergency or when you die. Creating a list of your assets, accounts, monthly bills, insurance policies, personal and medical information, locations of estate planning documents, and contact information for financial and legal professionals you work with can be extremely helpful.  

These conversations also provide the opportunity to share what roles you expect your children to play in your care and finances as you age, why you made certain inheritance and estate planning decisions, and what your final wishes are. “The worst thing you can do is leave [your kids] wondering,” Cheng says. “You want to give them peace of mind.”

Because these conversations can be tricky for some families, it can help to work with a financial or legal professional who can serve as a moderator. Thanks to our professional backgrounds, my husband and I felt comfortable tackling the conversation on our own: He’s an economics professor, and I’m a financial journalist who has written a book about talking to parents about their finances. Our kids have been subjected to discussions about money for as long as they can remember.

You and your children might find that family money talks are not nearly as difficult as they may seem. In fact, I hope you discover how truly beneficial these conversations can be. 

When I asked my daughters whether our conversation was depressing, they said it had the opposite effect. “There’s not going to be a better time for a conversation like this,” Zoe said. “It makes me happy that you care enough about your lives and our lives to do this.”