How to Have the #RealMoneyTalk When You Go Home for the Holidays

The holidays are rapidly approaching. Amongst all the merriment, gift giving and twinkly lights, no holiday trip home is complete without a couple awkward questions about your future. Sometimes it’s the less-than-tactful aunt who asks when you’re finally getting married and making your mom a grandmother already. Other times it’s your parents sitting you down and asking about your financial situation.

Before packing your bags this holiday season, here are four different money conversations you should prepare to have:

Are You Even Coming Home This Year?

It’s a potentially painful conversation, but you need to decide early if you’re even going to be joining in the family festivities this year or if a trip home is prohibitive for you. It’s understandable that your family wants and expects you to come to share in the merriment, but for those who live across the country or an expensive airplane ride away from loved ones, it may not be financially viable.

Have this #RealMoneyTalk early. Don’t leave your family on the hook until the last possible moment and be honest about the financial limitations. Explain that you love them and wish you could be there, but you just aren’t able to swing the cost of the travel. You can still FaceTime or Skype-in during family together times though. Having an idea of when you may be able to come to visit in the near future can also help offset some of the hurt because then you’re giving your parents something to look forward to. Another reason to be honest: you never know, they may be willing to help subsidize your travel expenses.

In the future, you can also start a holiday travel fund into which you put little bits of money aside out of every paycheck in order to have enough saved up when holiday travel rolls back around.

Setting Gift Giving Limitations

One of the most critical parts of talking money at the holidays is setting guidelines on family and friend gift giving. Family expectations may be high and unrealistic with your budget, so clarify early if you’re interested in being a frugal Santa this season.

Here are some of the questions you want to answer:

• How much are you spending on each other?
• Are you buying a gift for each person in your family or can you do Secret Santa style?
• If you’re in a relationship, are you also buying presents for your partner’s family?

Be honest with your loved ones if you are cash-strapped this holiday season. You can come up with creative, frugal gifts too (parents love the gift of quality time spent together!).

Do not ever go into debt for gift giving. One way I like to save up for holiday presents is with cash back rewards on credit cards. I earmark that money at the beginning of the year as part of my holiday budget – which provides a nice little sum to put toward gifts without blowing up my budget.

Another great strategy is to avoid procrastinating your gift giving and instead start really early, like August or September so you can manage your cash flow in getting one or two gifts at a time. That way it doesn’t feel like you’re spending a ton of money all at once in December, but rather, you’ve been spending in a comfortable way over the last several months.

Getting Off Parental Welfare

Are you currently still cashing checks at the Bank of Mom and Dad? The ultimately awkward #RealMoneyTalk during the holidays is being told your parents are pulling their financial support. It’s important you don’t get defensive and instead are thankful that your parents have helped bankroll you for all these years.

But now it’s also time for an action plan. Be sure to discuss:

• Will there be a phase-out or is this a cold turkey cut off?
• Realistically, can you cover the cost of your life without their support?
• If no, what needs to be cut from your budget and how can you start earning more?
• Can you stay on family plans and reimburse them? For example, it might be cheaper for you to keep your cell phone bill on the family plan – but you can pay back your parents each month for the cost of your line.

Talking About Your Parents’ Future

In some cases, you’re going home with the intention of giving your parents a stern talking to about finances. You need to know if they’re setting themselves up for a comfortable retirement or if it’s possible that you are the retirement plan.

It is not outside the realm of possibility that you will need to support your parents in some way. This could be financial assistance or having your parent move in with you. It’s also important for you to have at least a high-level overview of your parents’ financial situation. You need to know:

• Do they have a will (if yes, where is it stored and who is the executor)?
• Do they have a power of attorney/medical power of attorney designated?
• Do both parents know how to pay all the household bills and where all the financial information is kept? It’s not uncommon for one person in a relationship to take lead, which could mean the other parent doesn’t know passwords to accounts or even which bills need to get paid monthly. You don’t want to be stressing about this while grieving.
• Do they have long-term life insurance?
• If your parents haven’t retired yet, do they have a date when that may happen or an idea of how much they need in order to retire comfortably?
• What do they want their retirements to look like?

It’s not the most comfortable conversation, but if you don’t get to see your parents in person too often during the year, the holidays can be the ideal time to have this #RealMoneyTalk. Perhaps your parents won’t be ready to open up completely on the first attempt, but at least you’re laying the groundwork to continue the conversation.

This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.