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Ask Farnoosh: Talking to Parents About Their Long-Term Financial Plans

@LavernMcDonald asks via Twitter: My now retired, healthy parents [in Florida] have shared nothing about their finances or their long-term plans. How do we start the [conversation]?
 
It’s fantastic that you’re thinking about approaching your parents about their financial plans. I know this can be an extremely sensitive issue for both sides. No one likes to imagine the what ifs and it’s sometimes awkward for parents, who’ve always been the caretakers, to suddenly solicit financial advice or help from their kids. As parents, they may still want to feel in control and you should account for that, says David Solie, author of “How to Say It to Seniors: Closing the Communication Gap with Our Elders.” “The goal is to acknowledge that they are independent, want to stay that way and you want to support them in that. It’s all about them making better choices and the goal here is to be able to show them that they’re in charge but you’re on their team,” he says.
 
The fact that your parents are healthy and active means that now is actually the best time to start a discussion. Begin by asking them how they envision their next 10 to 15 years. Explain that you want to help them achieve that vision and that to do so, it’s important that they share key information with you in case of an emergency. In that first meeting you may want to also ask for a list of important contacts including their accountant, lawyer, doctors, lenders and insurance agents.
 
To your parents, the conversation may seem to come out of the blue, so I suggest breaking the ice by referencing an article you read online about adult children and their aging parents or any of the surveys showing how retirees may outlive their savings. Then ask, What do you think about that?
 
I recently did this very thing with my parents and while my mother did admit the conversation depressed her slightly, in the end, both came to the conclusion that they needed to update their will and refinance their mortgage to save more for retirement. It wasn’t the easiest initial conversation, but I feel like the door’s now open for me to continue talking to them about their goals and financial status. I feel part of their team.
 
@CollegeGuru1425 asks via Twitter: How much is too much to pay for an apartment right out of college?
 
Your housing budget shouldn’t exceed more than 30% of your take-home pay. Calculate your after-tax monthly salary and multiply that by 0.30 -- that’s the most you really want to shell out for rent, assuming you’ll have other expenses to cover, including transportation, food, utilities and student loans. If you live in an ultra-expensive city like New York or San Francisco, keeping to this budget is especially difficult; you may feel pressure to spend 50% or more of your income on a lease. But if you’re willing to make some sacrifices – live with two or more roommates, live in a walk-up building and commute 20 to 30 minutes to work by subway -- you can have an easier time staying within that 30% budget. And if you do live in a high-priced city, remember that it can offer you savings in other ways such as public transportation or a short walking distance to work, says Ornella Grosz, author of "Moneylicious: A Financial Clue for Generation y." “You may have to pay a little more [for rent], but it could be worth it.”
 
If you have family nearby, there’s no shame in shacking up with relatives or Mom and Dad during that first year – even if you have a job. As long as everyone’s game, getting free (or almost free) rent can be a major financial stepping stone for you. Take advantage of any opportunities like that and use the savings to aggressively pay down any debt you have. Consider the time spent at home a real investment in your future.
 
For more, check out a previous Ask Farnoosh column on how to save money on your first apartment after college. 
 
Got a question for Farnoosh? You can reach her on Twitter @Farnoosh or email her at farnooshfinfit@yahoo.com.
 
 

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