February 2, 2023

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How to help parents in debt

A parent’s financial problems can be very difficult to deal with. This is one of the most difficult situations you can face in your financial life: realizing that your aging parents are in debt. Maybe they’ve been caught off guard by rising medical bills, or maybe they’ve just taken too many years away from saving and investing. Whatever the cause, they will need help to get their finances back on track, even if they don’t want to ask for it.

Discussing your situation is perhaps one of the most challenging conversations you will ever have—and one of the most necessary.

What to ask her

If your parents are in debt, it can put a strain on your relationship with them. Finding a technical personal finance solution to their problem won’t be their biggest challenge. Instead, it will be about asking lots of questions, listening carefully, and deciding if they actually want help and are willing to accept it.

If yes, great! you can help them But when they don’t, one of the hardest things you will ever do is respect their decision, even when their situation could only get worse.

In my experience, when you approach money gently and compassionately with your loved ones, they open up to you.

Every situation is different, but here are some questions to ask. (Remember: tread carefully. Nobody likes to talk about money—especially when it means having to admit to their kids that they need help.)

■ Where did you learn about money? What did their parents teach them?

■ If you could wave a magic wand and find yourself in any financial situation, what would it be? (Let them dream here. When they say “win the lottery,” encourage them. What would that mean? What would they do? Then become more realistic, “Okay, let’s say you can’t win the lottery. What would your ideal be like five years from now?” Most parents have pragmatic dreams.)

■ How much do they earn per month? how much do they spend

■ What percentage of their income do they save? (Almost nobody knows this. Be reassuring, not judgmental.)

■ Do they pay fees for their bank accounts and credit cards?

■ What is your average monthly credit card balance? Out of curiosity (use that expression), why isn’t it null? How could they get it there?

■ Do you have investments? If so, how did you choose them?

■ Do you own one or more mutual funds? How much do they pay in fees?

■ Are you maximizing your 401(k)s and contributing at least as much as your organization does?

■ What about other retirement vehicles like a Roth IRA? Have you a?

■ Are you reading iwillteachyoutorich.com? NO? WHY NOT FATHER?!?! (Note: I strongly recommend that you yell at them really loud.)

Your parents may not have the answers to all of these questions, but listen carefully to what they are telling you. I would encourage you to take the 85% solution approach and find one or two key actions you could take to improve your financial situation. Maybe it means setting up an auto savings account or focusing on paying off a credit card so they can have a little sense of accomplishment. Think back to when you knew nothing about money and it was incredibly overwhelming. Now you can use what you learned to help your parents make small changes that will have big results.

Should you tell your parents and friends how much money you have?

Years ago I felt like I should talk to my parents about money. My business had grown. I had become more financially secure than I had ever imagined. And when my parents asked how business was going, I would respond in general terms—“Things are going well!”—when in fact I knew that sharing a single sales figure would be more specific than anything else I could say.

I called my friend Chris for advice.

“Should I tell my parents?

Chris is an author who grew up in a similar household to mine. He immediately understood what I meant.

“Why do you want to tell them?” he asked. I told him it would answer a lot of questions that I felt lay beneath the surface. Am I doing well financially? Did my parents do the right thing by moving to this country? are you proud of me

But I was nervous because I thought sharing certain details about my success might change my relationship with my parents. “It might get weird,” I said, using a charged word that anyone with ethnic parents will understand.

Chris knew better than anyone what it was like to grow up as an Asian kid with frugal parents and then earn more than anyone could have ever imagined.

Ultimately, I realized that I wanted my parents to know that I was fine — that they prepared me for life, that I learned their lessons, and that they had nothing to worry about.

Chris pointed out that I thought a single number would tell all of this, but in reality I could reassure my parents in many different ways. I could just tell them my business was doing well. I could thank them for teaching me the discipline to build a business. And I could do what parenting means most: spend time with them.

Chris was right. He taught me that my intention was correct, but I didn’t have to go into exact dollar numbers to communicate that I was safe. In reality, my parents don’t care what my bank account number is – they just want to know that I’m happy (and of course that I’m married with kids – those are Indian parents I’m talking about). .

The next time I spoke to my parents and asked them how things were going, I took the extra time to thank them for everything they had taught me and told them that they made me lucky to have one Having a dream business that allowed me to live an incredible life.

The central theses:

■ As you become more financially successful, your relationships with others may change. Be aware of this. (For example, I’m over-conscious of what different people can afford to spend on a dinner or vacation. When I meet up for dinner with a group of friends, I always pick a restaurant that we can all afford. My nightmare is that Pick a place where they feel financially squeezed.)

■ You may be tempted to share certain numbers. If it’s with your spouse or a very close friend or family member, okay. But aside from those people, ask yourself why: to communicate that you’re okay? Or is it to show yourself subtly? Are there other ways to communicate this? Remember that sharing numbers without context is a bad move. Your intentions may be good, but telling someone who makes $60,000 that you’re on your way to having a $1 million portfolio (or much more) doesn’t convey security. It communicates arrogance.

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