Invest in You: Ready. Set. Grow.

How to navigate uncomfortable money matters with your family

In this article

Oliver Rossi | Stone | Getty Images

The coronavirus pandemic may be putting you in some uncomfortable financial situations with your family.

A relative may have asked for a loan, or your young adult child may be looking to move back home. You may be struggling financially and haven't addressed it with your kids, or you may be thinking about estate planning but don't know how to broach the subject.

Instead of avoiding the issue, there is no better time to address it head on than now, said Winne Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners.

"Bringing up money with family can be uncomfortable and even be seen as taboo, because it's not a normal conversation that's brought up," she said.

More from Invest in You:
Many military families are struggling in the era of Covid
Pandemic is worse than 2008 crisis for a majority of Americans, study says
The big lesson Suze Orman learned from her recent health scare

While it's easier to speak with financial professionals about your finances, we try to keep peace with the family, have lighter conversations and speak about things that we think will unite us, she explained.

"However, having these more intimate financial discussions can actually bring your family closer."

Nearly half of all Americans, 47%, struggle to discuss finances with their loved ones, according to a November 2019 survey by Lincoln Financial. Personal finance was the third-most-challenging subject for families, behind sex and death, the poll found.

It's easy to let things go unaddressed when things are going well, said Sarah Newcomb, director of behavioral science at Morningstar.

How to balance marriage and finances
How to balance marriage and finances

When money becomes tight or life becomes unpredictable, there is always room for disagreement, she said. The same goes when you combine financial lives, such as after a marriage or when a young adult child moves back home.

"When our financial lives are separate from one another, there is no need for conflict, but once someone else's management style starts to affect your own financial goals, there is potential for conflict," Newcomb explained.

While it may seem like a good idea to broach money matters during the family holiday meal — don't, said Cameron Huddleston, author of "Mom and Dad, We Need to Talk" and a family finance expert with Carefull, an app that monitors and protects the money of aging parents.

For one, there may be people at the gathering who don't need to be a part of the conversation, she said. Then, there is the alcohol component.

If you decide to lend to your family, you should assume there may be possibility you'll never be paid back.
Winnie Sun
Co-founder of Sun Group Wealth Partners

"If someone has had too much wine, the conversation could go downhill real fast," she said. "And some family gatherings are tense already.

"So the last thing you want to do is start talking about money to turn up the tension."

If you are visiting your parents or your adult kids are in town and you need to talk, at least wait until after the meal. Find a time when you can sit down and have a discussion "when all of you are relaxed and emotions aren't running high," Huddleston said.

Here's how you can handle some of the more uncomfortable financial issues that may arise with your family.

Requests for loans or financial support

PixelsEffect | E+ | Getty Images

It's never easy dealing with a family member who is asking for money to pay bills or for a loan to get them through a rough patch.

"If you don't feel comfortable with lending or financially supporting someone, you shouldn't," said Sun, a member of the CNBC Financial Advisor Council.

"If you decide to lend to your family, you should assume there may be possibility you'll never be paid back."

About 60% of Americans have loaned a family member or friend money, expecting to get paid back, according to a 2019 survey by Bankrate. However, 37% of those who fronted the cash reported losing money and 21% said the personal relationship worsened.

Give an honest answer quickly, so the family member can pivot and look for other resources to help, Sun advises. You may even introduce them to a banking contact or co-sign a loan with an institution you are comfortable with.

Don't beat yourself up if you say "no." Money management is emotional, said Newcomb. Just remember that you shouldn't undermine your own financial stability.

"Recognize when saying 'no' is the merciful thing to do for yourself and that is OK," she said. "It is OK to protect your own solvency."

Adult kids at home

Willie B. Thomas | DigitalVision | Getty Images

Young adults are moving home to live with mom and dad in record numbers.

In July, 52% of them lived with one or both of their parents, up from 47% in February, according to a Pew Research Center analysis. That surpasses the peak hit during the Great Depression, Pew said.

Parents should talk to their children about their contribution to the household. Some may contribute financially to the budget, if they are employed, or they may use the time to amass savings so that when they move out, they are financially secure.

If your adult child isn't bringing in any income or is setting their money aside into a savings account, there are other ways to have him or her contribute to the household.

That may mean cooking the meals to lift the burden off of someone else or providing childcare or help with virtual learning to younger siblings, Newcomb said.

"They are bringing their resources, their creativity to the fore," she explained. "They are giving to the household."

Spending money on the 'wrong' thing

Marko Geber | DigitalVision | Getty Images

You may not like the way your 20-something daughter is spending or the money management style of your spouse.

Instead of immediately focusing on the numbers, realize that there is much more personalization involved in how we deal with our finances, Newcomb said.

"Every decision people make with their money is a genuine attempt to meet a real and valid human need," she explained.

For instance, if you see someone spending a lot of money going out with friends, you may view that as irresponsible — or you can say they really prioritize their social relationships.

The ultimate goal is to come up with a strategy where all family members' needs are met. That may mean finding a way to meet that need in a way that may cost less money. So if feeling a sense of beauty is essential for you, instead of buying shiny objects, take a bubble bath or get a pedicure.

"You also have a need for security, you also have a need for stability," Newcomb said. "You don't meet one need at the expense of another."

Estate planning

courtneyk | E+ | Getty Images

Estate planning is one of the most important financial conversations you should have with your family, Sun said.

Sun suggests finding a reason to bring up the conversation, such as a family member or friend who is going through it or an article you read about it.

Children who want to address the topic with their parents should find a quiet, relaxed place to do so.

"Just say, 'we should figure this out together, because I want to make sure I know how you feel about this and what you'd want,'" Sun said.

"Let your parents guide the conversation and know that it doesn't have to happen all after Thanksgiving dinner, but it should spark the conversation of future conversations."

If you are a parent who wants to talk to your adult children about your plans, bear in mind that your kid probably doesn't want to talk about you getting older or dying.

Let them know that it's important to you that your children, and possibly grandchildren, keep what you've saved for them.

"Let them know there are some decisions that still need to be made and you want them to be part of the conversation and pause, Sun said.

"At that point, let them respond and listen to their responses,' she added. "It will help start the conversation."

SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.

CHECK OUT: This is the easiest way to grow wealth, says author who studied 177 self-made millionaires via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.