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Growing up money was never talked about in my house.
As a kid, the only thing I knew about money was that we didn’t have any.
I mean there’s really no way to hide it when utilities are being disconnected and you have to do everything from taking a shower to eating dinner at your grandparents house.
Yeah see I didn’t experience that “can’t afford name-brand ” poverty. This was “barely have my basic needs met” poverty.
Things mostly stayed this way until I was in around 7th grade which was perfect because middle school kids can be real a-holes and the last thing we could afford was therapy.
A few things happened that year, though. My mother was promoted at her job AND she married my step-father who was also gainfully employed.
Life for us changed almost immediately.
We were now able to afford quality clothing items.
The bills were paid on time.
The newer cars we got had working A/C which is a big deal during the scorching Texas summers.
We even moved from Section 8 apartments to a small, brick house.
Even then, we never talked about money as a family. Not even a simple what not to do.
Also, because our basic needs weren’t able to be consistently met before this point, more income took care of a lot of our problems.
This led me to believe that we were in a good place financially.
But most families reach a point where additional income just doesn’t solve problems like it used to.
A lack of financial discipline can actually turn more income into a nightmare in some cases.
See, at some point, how you handle your income becomes the main problem. And a failure to address bad money behaviors can be detrimental to not only you, but the generations behind you.
I’ve been asked more and more by other millennial couples staring at astronomical student loan debt, overpriced mortgages, and stagnant wages how to explain to their parents that they won’t be able to take care of them in their retirement years.
You can actually hear the fear and dread in their voice as they say it.
As millennials ourselves, my wife and I have our own concerns about how much our parents may need to rely on us for financial help.
56% of Americans have less than $10,000 in retirement savings.
According to a study done by Fidelity, the median 401(k) balance for someone between the ages of 50-59 is only $60,900.
That same study shows a median of just $62,000 for folks aged 60-69.
This means, more likely than not, most of us will be tasked with helping our parents financially as they near retirement.
For us, this made coming up with a number we’re comfortable retiring with almost impossible.
A stream of constant “but what if’s” when planning your retirement can really zap your enthusiasm on the subject if you’re not careful.
That’s why I’m an advocate for having the tough conversations early with people you think may need some financial assistance as they age.
And I think the first conversation needs to be had within your household.
Figure Out What You’re Capable Of
You must first determine what you may be willing to and what you may be able to provide in terms of financial support for your parents.
This is especially important if you’re a couple. You have to always keep the communication open in your household and do your best to stay on the same page.
I would recommend planning some uninterrupted time, really digging into what you can invest consistently over time, then calculating what your nest egg might be when your parents could start to need help.
Once you have a general idea of what you’re working with, it’s easier to determine what (if anything) you may be able to assist with.
Keep in mind, the answer to that questions just may be nothing. You may have kids college tuition to think about and you definitely need to be prioritizing your own retirement.
While it’s true that none of us can predict the future, a failure to at least attempt to prepare for this situation only ensures you’re even further behind if that time does come.
Talk With Other Family Members
Once you’ve laid out what you can or can’t help with, it’s time to involve any other family members who may be asked to support your parents financially. This needs to happen without the parents there.
In some cases, there may be no one else to talk to as in cases of being an only child.
However, if there are others, this is the time to get everyone on the same page by addressing and acknowledging the potential problem.
Everyone needs to be very clear about what they can or can’t do.
For example, maybe someone can cover some utilities. Or perhaps a sibling has a spare room that can house your parents if necessary.
Everything needs to be put on the table before it’s brought to your parents attention.
Talk With Your Parents
In most cases, you can expect this talk to go about as badly as you’re picturing it in your head right now.
The truth is most people would rather disclose an STD than the bad about their financial situation.
With that in mind, your best bet is to go in calm and relaxed, yet firm and direct.
Your number one goal has to be coming together to create a plan that works for everybody and gets your parents headed towards a better future.
I would start the conversation by discussing the progress you’ve personally made if the situation isn’t dire.
“Hey Mom & Dad we’ve been making some really good progress with our money lately.”
With the next statement, you don’t want to be condescending or rude, but again firm and direct.
“I know you guys have had your money struggles in the past and this plan I’m working on really works. I just want you guys to live a life you deserve, so if you ever want or need any help getting your money organized, I want you to know that I’m here to help you in any way I can.”
At this point, you have to be prepared to be blown off with a “we’re fine”. Most parents don’t want their kids telling them what to do…especially when it involves money.
But if you’ve been providing any financial support, you’re involved in their money already. And at this point, you should be aware of everything that’s going on.
Financial transparency should be a condition of the help you provide. This is to ensure that you’re actually helping and not enabling.
After all, their lack of planning affects how you plan for your future and it’s okay to say that out loud in your meeting.
Keep in mind, though, your role in this isn’t to control or manipulate your parents. And your parents are ultimately not your responsibility.
With that being said, you do have every right to walk away from the situation and cease the financial support or future option of support.
I have a friend whose parents always joke about coming to live with him and his wife in retirement.
He constantly reminds them that they do not have the extra room and have no plans of upgrading their lifestyle to accommodate his parents.
You get to make that same call. So if your offers to help them become more organized financially aren’t being taken seriously or if your helping them puts your own household in a bad spot then it’s best to say no.
Anything you give should also come in the form of a gift. It’s very rare that people have a fond view of people they owe money too.
Your expectation of being paid back and having it not happen can easily strain the relationship with your parents.
Finally, those of us in this position have to begin to understand that help doesn’t have to come in the form of money. Help can come in the form of educating them while they still have time to rectify the situation themselves.
However, if that’s the route you’re choosing, be upfront and fair. Let them know you will not be offering financial support. Especially if they fail to put forth the effort and work for a better future themselves while they still can.
And you may be nervous or even think having a conversation like this is mean. But what’s even more mean is having no plan to support your parents financially and never telling them.
Protect Your Household
Breaking the chains of generational poverty is a lot to handle. Not just from a purely financial aspect, but emotionally and mentally as well.
However, your top responsibility when it comes to your money is your household. Period.
At the end of the day, you shouldn’t use your kids college fund to support a parent.
You shouldn’t sacrifice your own retirement to support someone elses.
Decisions like that will only make you the same parent relying on their child in retirement. At some point the cycle must come to an end.
At the same time, this is why working towards a better financial future for yourself is even more important if you come from poverty-so the option to take care of a sick, elderly, or just financially irresponsible parent is just that…and option.
Again, if you and your spouse decide to help, make sure there is a high level of transparency.
You should be able to see everything from bank statements to credit card statements, and anything else that relates to their finances.
Not to control them, but to be able to determine the best ways to help them.
Things To Consider
Paying more than half of your parents expenses could make them eligible to become your dependent.
You’ll definitely want to follow-up with a tax pro for further clarification on that one.
Another thing to note is more than half of U.S. states have what’s called filial responsibility laws.
What this means is adult children are responsible for financially helping parents who are unable to pay for care.
You can read more on that and see the rules for your state here.
When it comes to family and money, there can be a lot of emotions involved.
One of the worst things that can happen is losing a relationship with a parent or sibling over money.
Again, make sure you take care of the needs in your household first.
From there, have firm and direct conversations detailing what you will and won’t be able to provide financially.
If you’re looking for a resource to help your parents financially, we created a course that you can purchase as a gift.
I would recommend having a financial conversation with them first and offering to help instead of just doing it.
If you’re interested, you can learn more by tapping here.
Have you had to have a conversation with your financially insecure parents? If so, I’d love to know how you handled it. Leave us a comment below.