It's time to talk turkey. No, not that big bird in the oven, but the chance to chat about a far less mouth-watering topic: family finances.
This week, as parents, kids and siblings gather 'round for the holidays, financial experts say it can be an ideal time to initiate conversations about money matters.
"A family-centered holiday is a good time to talk," said Eleanor Blayney, a certified financial planner and consumer advocate with the CFP Board of Standards in Washington, D.C.
To make the conversation-starters easier, we've broken them down by category:
It can be a delicate topic to broach. If you come across as aggressive or condescending, it can sound like you're only interested in how much money they've got or how much you'll inherit.
"Your approach is crucial," said Cindy Adams, a Sacramento-based certified financial planner. "Family dynamics can be explosive. Be compassionate: 'What can we help you with financially? Is there an issue you'd like to talk about?' "
Another way to bring up the topic is by talking about a "friend" who is dealing with financial issues regarding their parents.
The goal is to avoid financial turmoil later on. "If something happens and a parent is in the hospital on life support, you don't want to be in a situation where you don't know their wishes, you can't pay their utility bills, etc.," said Adams.
She suggests asking parents to make a list of accounts (with banks or brokerages where they're held), along with other documents such as a will, trust, health care directive or power of attorney.
"They don't have to share the list or the amounts with you, but you should know where the list is located and/or the attorney who drafted their will or trust," said Adams.
Don't give parents a checklist of what they should do, the financial planner added. Instead, raise the issues and give them time to think about what you've discussed. "So it's, 'Next time we get together, we can talk about it.' "
As someone who lost both parents to Alzheimer's, the CFP Board's Blayney said one of her regrets is not knowing her parents' end-of-life wishes.
Families can avoid that emotional trauma by discussing those issues in advance. Do your parents want to stay in their own home? Are there sufficient financial resources to make that happen? Who would be best suited to help them with financial decision-making, if needed? If they have a will or trust, are their wishes included in power-of-attorney documents?
"Having parents express their wishes releases the child from making decisions that can be very hard," said Blayney. "The greatest gift you can give to your children is your own financial planning. If you state your wishes, it clears up so much confusion and the possibility of disagreements between siblings."
One of the necessary discussions may be how to support Mom or Dad, should they need care.
"Often times, kids assume the daughter will take care of the parents. But that needs to be negotiated," said Blayney.
Is someone willing to take an aging parent into his or her home? If so, what are the other siblings' responsibilities? Who has power of attorney to pay bills?
You should also discuss with siblings if you've named one of them as guardian to raise your kids in the event something happens to you.
"People's lives change, and this once-a-year check-in can be a great opportunity to make sure you and your siblings understand each other's wishes," Blayney noted.
As a mother and a certified financial planner, Tina Florence knows she wants her two teenage sons to be money-savvy. So when her 19-year-old college sophomore returns home from the University of California-Los Angeles this week, she's got a mission: getting him to open his first Roth IRA account.
"I'm gonna raise the issue," said Florence, who sees a Roth IRA as a perfect introduction to investing and to launching long-term savings for retirement. Even for a 19-year-old.
She said a Roth IRA can appeal to college students, who can get statements, make trades and do their investment research online. And it's in the student's own name.
The annual contribution is limited to the lesser of $5,000 or the account holder's earned income, typically from a W-2. And because withdrawals before age 59 1/2; may be subject to taxes and penalties on earnings, a Roth IRA has "golden zip ties" that discourage taking out the funds early, she said.
"It's a real advantage to get this account started young in your financial life so it will continue to grow in the event you are no longer able to open or contribute later on."
As a financial professional with Lane Florence LLC in Folsom, Calif., Florence says she's seen plenty of clients who are embarrassed to admit they never learned the difference between stocks, mutual funds and ETFs.
Starting teens early with something like an IRA lets them pick up the investing vocabulary.
"It helps make them educated investors so if they ever hire an outside adviser, they'll understand the meaning of reinvested dividends, ETFs, mutual funds. They'll know the language."
Blayney says holidays also are a good chance to discuss with your college kids the financial implications of decisions they're making: changing majors, dropping out of school, getting a graduate degree, traveling, moving back home.
Make it clear how much you can — or cannot — financially support those decisions.
"As parents, we all want to give as much as we can. But kids have longer to recover than parents do. Don't mortgage your own retirement by supporting your children."
In some cases, she said, a little tough love and honesty may be in order: " 'Your father and I are five or six years away from retirement, and we're a little bit further behind than we'd hoped to be.' "
It's a chance to let college-age kids understand the family's financial limitations and learn how to do their part, she noted.
Some families like to use the holidays as an occasion to pick individual names for gift-giving, set a dollar limit or encourage handmade gifts, instead of store-bought.
One of Adams' client couples always asks their kids gather up their unwanted toys, then donate them to a local charity. "It's trying to teach (the kids) the need to give at the same time they're getting."
Ultimately, having financial conversations can bring families together over shared goals and go a long way in helping avoid future arguments, say experts.
In some cases, it may be necessary to set up a meeting with a financial professional who can help sort out divisive or technical issues involving property or trusts.
"All of this doesn't have to be nailed down during the holidays," said Blayney. "But initiating the conversation and getting in the habit of being a little more open about our financial relationships with one another can only be a good thing."