Personal-finance columnist Charlotte Cowles asks the nosy, revealing, sometimes uncomfortable questions about money so you don’t have to.
Photo-Illustration: by The Cut; Photo: Getty Images
Most Americans do not have rich parents. But if you suspect your family may be more well-off than you’ve been led to believe, it’s worth asking questions. “A lot of boomers have more money than they need and certainly more than enough to help their kid with their wedding or student loans or a down payment for a home,” says AJ Ayers, a certified financial planner and co-founder of BKFi, a money-management firm based in Brooklyn. “The least you can do is ask. But I find that a lot of people are afraid to.”
Perhaps you’ve heard about the “Great Wealth Transfer”: Boomers — the richest generation in American history — are expected to pass an estimated $84 trillion to $124 trillion to their heirs by the mid-2040s, resulting in the largest transition of family money to date. Many of us assume we won’t be on the receiving end. But what if you are? One of the many pieces of advice Ayers gives in her upcoming book, Creative Money: New Financial Rules for Artists, Innovators, and Misfits, is how to address the question of “secret family money” — especially if your parents are squeamish about discussing their finances. (She also tackles the opposite scenario — what to do if you find out your parents will be financially reliant on you.)
Ayers believes we should all talk to our families more often about our money — and the sooner the better. “Sometimes parents think they’re protecting their adult children by not telling them about their finances, but that just makes it harder for their children to make an informed plan for their future,” she says. Below, she shares her tips for bringing it up, asking for help, and dealing with miserly relatives.
So do you have secret family money? And if so, how did you learn about it?
I grew up in an upper-middle-class family. But my parents had a very contentious divorce that lasted for most of my childhood, so money became this explosive topic. Someone wasn’t getting the money they deserved, someone was withholding money — it was a big source of conflict. I knew we had money and it bought us beautiful things like nice houses, but it also threatened happiness. It was very confusing.
After college, I went into book publishing, which doesn’t pay very well. And it was obvious among my friends who was getting support from their parents and who was not. I did not get regular support. That said, I remember my dad once coming to visit and seeing the state of my apartment and giving me $400. Another time, I had a bad breakup and needed $1,000 for a security deposit on a new apartment. My dad helped me then, too. So there was a safety net, absolutely, but there wasn’t a steady drip. Frankly, I resented that. My thinking was, Hey, I graduated from college. I’m not spoiled. I’m working two jobs because I have student loans and rent to pay. If my parents could spare $300 a month, it would dramatically change my life right now and it would make no difference to them. If it was difficult for them to spare that money, then that’s completely different. But for them and so many boomers, they could have helped me a lot and they didn’t.
How did you finally approach the topic of money with them — and express that you would appreciate their help?
I switched careers and started making more money, so that changed things. I also got much more comfortable talking about money with them and in general. But I find many parents are more likely to help out for big milestones. When I was getting married, I went to my dad and said, “Hey, it would be amazing if you could contribute to our wedding.” And he did. But I don’t think you should have to hit a life milestone for that to happen. I think if a parent has extra money and a good relationship with their adult children and they’re happy with where those adult children are in life, they should transfer wealth to them now instead of waiting until after they’re dead.
What I see a lot with older generations is they think, Well, I worked really hard for this money and I might need it, so I don’t want to give it away. Which might be true. But a much better approach is for them to go to a financial planner who can tell them, definitively, how much money they have to spare. A lot of boomers don’t even realize how much money they have tied up in real estate and 401(k)s, and they’d get a lot more enjoyment out of those assets if they transferred at least some of them to their loved ones before they pass away. The stock market has done extremely well for the past decade and a half, and that has benefited older Americans more than anyone. Meanwhile, millennials have struggled with student loans, low wage growth, and high home prices, among other things. Plenty of boomers have more money than they need and certainly more than enough to help their kid with their wedding or student loans or a down payment for a home. They may just not realize it or know how to talk about it.
I think many people are nervous to ask their parents for money. They’re worried their parents will say “no” or the money will come with strings attached. How do you recommend going about it?
I’d start by asking about your parents’ financial plans. But be patient when you’re waiting for an answer. They may not have a plan — and they may be embarrassed that they don’t. They may not have as much money as they want you to think they do. It might take six months for them to respond. It might take two years or five years. But start now.
At the very least, you want to avoid the situation where your parent gets sick or passes away and nobody knows what’s going on, and there’s no will or the estate is complicated for no reason. At that point, not only have you lost your parent but you’re fighting with your sister over who gets to keep the lake house. Who wants to deal with a ton of legal paperwork and conflict when you’re mourning a parent and trying to manage your regular life stuff, like a job and kids? What a terrible legacy for a parent to leave behind. That’s what you want to avoid.
I have a list of questions every adult should ask their parents as soon as possible. You don’t need to sit your parents down and do it all at once, but don’t drag it out, either. I like to give my clients three months to complete the list. The key is to do it before there’s a crisis. Like, where are all your financial documents? Do you have an up-to-date will? Where’s the deed for your home? What’s your plan for long-term care? Are there investment accounts? Who manages them? How do I contact that person? Get that manager’s email address and send them a note that says, “Hey, I’m the child of so-and-so. Here’s my contact if you ever need me.” And you should have this conversation even if your parents don’t have a lot of money.
If your parents do have money, though, and you’re hoping they’ll be open to sharing some of it, try explaining some of your own financial challenges to them. A lot of people in their 30s and 40s are not having kids because they can’t afford them. And that’s really sad, especially if they have parents who could help. I think it’s perfectly reasonable to have a conversation with your parents about that, especially if they want grandkids. You can’t always assume that your parents know what you need; sometimes you have to tell them. You could say, “Hey, in the event that I wanted to buy a house next year with my partner where we could raise our family, would you be willing to help us with a down payment?” They might say “no,” or they might say “maybe.” And then, six months later, you could send them the Zillow link and a really mature email that says, “Hey, Mom and Dad, my partner and I found our dream house. It’s about $78,000 out of budget. Here’s the spreadsheet where we broke down all the costs. If you have anything to spare, it would make a huge difference to us.” That’s not going to work for everyone, but a lot of people don’t even try because they’re afraid.
I also think people are scared, with good reason, of their parents saying, “We didn’t raise you to ask for a handout.”
Or the opposite. Sometimes their parents are secretive because there is no family money and they’re embarrassed. In certain cultures, it’s expected that you, as the child, will be taking care of your parents when they age. But if you aren’t expecting that, it can be quite shocking — and really disruptive to your financial plans. So you need to know what their plans are, whether they involve you or not.
Another reason parents may not want to talk to their kids about money is that they don’t trust their kids’ judgment. Or maybe they do trust their kids but not their kids’ spouses. Or they trust one kid but not another. There’s a fine line between helping your kid and protecting them. How do you deal with that?
That is really tricky. I do believe that when people need help and you’re in a position to give it, you should. So if, for example, you have twins and twin A is a happily married, well-employed person with two beautiful children but twin B is kind of a fuckup, do you divert money from twin B to twin A? I think the answer is no. But it’s complicated. Of course, if someone has an addiction and you don’t want to enable it, that’s a different story.
Regardless, I think people need to reevaluate what their definition of “spoiled” is and maybe put that aside. How do you raise your kid to be a good citizen who isn’t entitled? Sometimes parents go overboard. I really resented everyone in my family when I was in my 20s and coming home at 4 a.m. from working my barback job in Gowanus. I was like, It doesn’t have to be this hard. At the end of the day, if your kid is going to benefit from your support and you can give it, the least you can do is talk about it with them.
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