Wells Fargo About Money: How do I talk money with my family?

Transcript: Hey, humans, I’m Michael Liersch, and this is the About Money Podcast, presented by Wells Fargo. I’m a behavioral scientist who loves openly discussing money to help humans better understand their money behaviors. By understanding our money behaviors, we all have the opportunity to make better money decisions.

We’re gonna have a lot of fun together, and start our first season with money taboos. For many of us money was, and still is, a taboo topic to openly discuss. The question is why? We’re gonna address those taboos head on and break through money silence. So we can all get closer to our money goals.

In this episode, we’re gonna ask ourselves how do I have the money talk with my family? When we think about talking about money with our family, there can be a lot of interesting dynamics. In fact, so many dynamics that on my team at Wells Fargo, we have a whole group dedicated to it called Family Dynamics.

And so when you think about this idea of money talk and families, and why we have dedicated teams to helping families navigate money conversations, one of the key factors that comes up is that, in families, there are not only different values or perspectives on money and how it should be used but there’s also vastly, in some cases, different levels of wealth in families.

So think of cousin groups that have different family units with different wealth levels. Brothers and sisters. Spouses and partners of those brothers and sisters. Parents. Grandparents. So there can be a lot of families who have a lot of different reference points when it comes to not just again values, but the amount of money that they all hold.

So the bottom line there is that that can create a huge taboo around talking about money. Because if we all come to the table not just with different philosophies but actually different amounts of money that we have accessible to us to spend, to utilize, to have an impact on others, that can create some major disconnects that really families would like to avoid airing in public or in open conversation.

So how do we get past that? How do we move beyond those types of avoidances and money taboos to get to a more productive place?

You might want to ask yourself, well, Michael why would I even want to get beyond that? Isn’t it just better to move forward without talking about so we can all just get along as human beings? Why make money even a factor in how our families interact? All that kind of stuff.

And what I would say is I’ll point to some research. And then I’ll also give you some tangible examples of why you might want to not anchor in money silence and, instead really move forward with some money talk. So there’s something called the shirtsleeves-to-shirtsleeves phenomenon. And really if you put it all together it’s shirtsleeves-to-shirtsleeves in three generations.

And in that phenomenon, what happens is there’s a wealth creator, so someone makes wealth. Then in a second generation, so think of their children, 70 percent of the time there’s no wealth left in that second generation. So their wealth disappears. It dissipates. By the third generation, so think of the grandchildren of that wealth creator, 90 percent of the time there’s no wealth left from the original wealth creation. So by the grandchildren – by that third generation — only 10 percent of the time is there still wealth remaining from the original wealth creation. And this is a phenomenon that’s not just in the United States, but it’s a global phenomenon.

Why does this happen? Well it happens, research shows, through a lack of communication. A lack of communication in families about money, about wealth. And you might ask yourself, well, what do we mean when we talk about communication? What we’re really talking about is actually being deliberate about sharing our perspectives, again, our values our, let’s call it money information, money decisions with other people in our families, so everyone can understand where we’re coming from and why we’re doing what we’re doing with money.

Some tangible examples of why that can be really critical. So when we think about getting together as large family units, perhaps you’ve had a family reunion, or let’s say you have a regular tradition, so around a holiday where everyone gets together in your family. If you decide not to talk about money, perhaps that get-together, that tradition, whatever it is you’re doing together, perhaps that costs money. People had to travel to get there. Perhaps there was some expense involved, not just in the travel but in what you’re doing together. Depending on whether you’re staying at someone’s house, the host would have to spend money. If you’re all staying in another location, everyone would have to spend money to be at that location. Presumably, there are meals where everyone’s eating together. There’s just a lot going on. Activities. And by not talking about it implicitly, what you’re all doing is you’re moving forward with this type of tradition without understanding whether everyone’s uncomfortable, or whether they’re comfortable with these types of expenses and with this type of format of interacting with one another.

The same goes for gift giving. In many families – and I hear this actually quite often—gift giving goes un-talked about but is extremely disruptive in families. So a quick tangible example is a family I worked with where the grandparents decided to give a gift to a grandchild without checking in with the parents of the grandchild. Okay? So generation-skipping gift. And that gift was a vehicle. A car. What had happened is the parents said that their child couldn’t get the car. The grandparents didn’t think that was right, so they gave the car to the child anyway, or in this case, to their grandchild. It was all with good intentions but ultimately created extraordinary family disruption that went unspoken and really created a rift in the family that ultimately needed to be resolved, because of another financial matter, which required their collaboration.

So this is the type of thing you want to avoid. You want to avoid these unspoken actions that involve money, that create disruption in your family, which ultimately can lead to more and more and more money silence. Which then, research shows, leads to the shirtsleeves-to-shirtsleeves phenomenon. So hopefully you’re following my logic here.

So you might want to ask yourself – we have the bottom line here, shirtsleeves-to-shirtsleeves. What actions can I take to get past this issue? So what I would suggest are two things in terms of taking action.

The first is, if you have any type of gift that you are giving to family members, I would really make sure that if you are giving that gift, you check in with the recipient and ensure that the gift is being received as intended. And I know a lot of people love surprises, but it’s particularly important when the gift comes to something like money, that there is two-way communication with that gift. And oftentimes a gift giver has some expectations around that gift. And the recipient has a reaction to that gift, because they understand there’s expectations. So I want you to think about, have you discussed that? Do you know if your gift is being received as intended and being used as intended? And is that recipient given a chance to react to those expectations?

So in this first action, I really want you to think about this gift-giving process and how you’re communicating around it. And if you’re a grandparent, giving gifts to your grandchildren, ask yourself, have you involved the parents of the children? Your direct kids in that process? So that no one is confused or no one has issues with what’s going on there.

The second action that I would encourage you to take is really around family traditions. What are the rules of the road when it comes to your family traditions? If it’s a family reunion, family get-together, family dinners, whatever it may be, is everyone comfortable with the financial obligations tied to those traditions?

And in that conversation, it’s really important to start with what the intention is of those traditions. And oftentimes it’s about family unity. It’s about sharing together all the things you love about one another and that you enjoy about one another. So if you start in that place, and then you move backward and say so are those traditions and the financial obligations associated with them, are they disrupting or preventing the full realization of that desired outcome of unity and enjoying time together? Or is it facilitating it?

So really talking through that in a very deliberate way, and how you can support one another in making sure that everyone feels good about those financial choices can be extraordinarily empowering and also help you all make the right decisions together to make sure those traditions are actually making everyone feel like the financial outcomes that result are positive rather than negative.

The last thing I want to highlight as we close out this episode is, when it comes to money in a family, it can be really critical to think about how you want to represent yourself as a family unit when it comes to money. I didn’t cover this in the beginning of the episode, but this is one of the most common issues I hear from family members is that some family members display wealth in some ways, and other family members display wealth in others. And that can create a bit of family conflict and disconnect and cause families to move apart rather than want to be together. Because they have different philosophies on how they want others to see them in the community when it comes to money.

So as a final thought, this isn’t really an action, I really want you to think about it for yourself, how do you want to represent yourself when it comes to money? And how does that translate in how you would prefer your family to represent themselves when it comes to money? And do you feel like there’s any disconnect between you and other family members you have? And how might you start to align those perspectives? Or at least understand one another when it comes to that idea of how you’re representing yourself and how your family is representing themselves as a collective when it comes to wealth.

So with that, I hope you have great money talks with your family. You define the rules of the road. And I wish you the best in the conversation.

That was it for this episode of the About Money Podcast. If you really liked the episode, share it with your family, friends, or anyone who listens to podcasts. Wells Fargo About Money is produced by Wells Fargo. I’m Michael Liersch asking you to talk about money today.

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