When Family Dynamics Derail Financial Planning

By John C. Fales

If you give $1,000 to every member of a family, there’s a high likelihood that no two members will spend it the same way.

Money is a tool that is used to accomplish goals, and it often takes some patience and understanding to uncover the motivation behind how each family member chooses to use their money. However, patience and understanding are not always the first reactions when family members discuss, or perhaps judge, their family members’ behavior.

Are family dynamics getting in the way of your multi-generational financial planning?

Planning for multi-generational families brings about unique financial concerns when you incorporate different viewpoints, backgrounds and goals.

Many families are not equipped to navigate uncomfortable issues, especially when emotional and psychological perspectives of family members lead to heated arguments. This can happen even among the most caring families.

Or the opposite can happen, where discussions make individuals clam up or discussions get quashed before progress happens.

Without addressing and understanding the differences in your family and moving beyond them, you may never create a beneficial plan or solution for your financial planning.

Successful multi-generational planning generally starts when families can agree on defining their values and guiding principles. By getting everyone on the same page and integrating these four steps into your planning, you can begin to create a family legacy that can last for many generations into the future.

1. Uncover and Discuss Your Personal Motivation

You may not even realize why you’re so passionate about having your say regarding the finances until you take a look at your personal motivation. Step one is identifying what you want.

Do you want charitable giving to be a big part of your financial planning? Something else?

The next step is determining why. Perhaps you were helped out at some point in your life and now want to help others. Or you have a passion to help a medical organization because of the loss of a loved one.

Once you uncover your motivation, you can more clearly explain why you hope certain decisions are made rather than arguing without basis when things don’t seem to be going your way.

2. Remember That Other People Have Their Own Motivation

It can be easy to think someone’s idea about how to direct finances seems silly if you don’t understand their point of view.

Another important step in overcoming disagreements in family financial planning is understanding that, just as you have motivations behind your desires, other family members have their own motivations.

Try thinking about things from their perspective to ease the negative feelings toward their actions. It can be particularly hard if they haven’t taken the time to really understand and be able to articulate their “why,” but a compassionate understanding that it exists can help move things along.

3. Be Transparent

If you’ve grown up being conditioned not to discuss finances, one of the biggest obstacles to overcome can be transparency.

Perhaps you’ve saved less than others in your family and don’t want to be embarrassed. Perhaps you have secret accounts that you keep to “do your own thing” and don’t want people to know. The hurt that can occur when someone is found to be dishonest can create lasting effects.

It’s okay to be in a different place financially than others in your family and it’s even okay to have accounts that are just “yours,” but disclosing that information and the reason for doing things that way can lead to a more honest and even trusting planning session.

4. Enlist A “Referee”

We understand the stress that can come from discussing finances within a family. A mediator or “referee” might be helpful.

We help guide families through the process to have a meaningful and productive discussion because passion often gets in the way of progress when no neutral party is involved.

By enlisting a referee, you have someone who can bring things back to a big picture view when you start arguing over the minutiae. A referee can help people articulate things when the words are escaping them or can call a time-out if things get particularly heated. The mediator understands the goal is to make the best decisions for everyone so they can help guide your family to the finish line.

Multi-generational families face financial concerns coming from different viewpoints and backgrounds, including wealth transfer, family foundation planning, and continuity while addressing emotional and psychological perspectives of family members.

It is important to address these financial concerns for a successful financial future. Not moving forward with planning due to family dynamics can be detrimental. If your family is struggling to get on the same page with planning, try these steps and see if they can help you move forward.

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Searcy Financial Services, Inc.

The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.  

Published for the blog on January 23, 2020 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.