Friday, 08 November 2013 15:34
Families shun difficult financial conversations says new research
Research for Standard Life among 4,000 UK adults has found that many families shy away from difficult conversations about money.
Despite families sharing thousands of pounds each year, only one in four people say that planning family finances involves all generations
Parents with children under five are much more likely to ask the family for money (79%) or for financial advice (75%)
The research identifies three distinct family types as the 'talkers', the 'gifters' and those that are least likely to benefit as a family, the 'avoiders.'
Standard Life's Family Financial Tree looks at the family money tree over four generations and there are some surprising findings, says the company.
Developed with personal finance expert, Sarah Willingham, The Family Financial Tree shows families collectively manage and talk about personal finances. The findings are based on survey data of over 4,000 adults in Great Britain
The report finds that many Britons remain typically British and private about our finances. While consumers might involve their spouse or partner in discussions and future planning, few say they communicate freely with others in their family about their finances. Many are unlikely to sit down and discuss important Financial Planning issues together, says Standard Life. When conversations do take place, they focus more on immediate needs and less on planning for the future.
More than a third of parents (35%) and two fifths (43%) of grandparents would not ask anyone within their family for advice about finances. And despite evidence that a large volume of money is moving freely between generations, only one in four (25%) people say that their family financial plans involve all the generations.
However, the attitude of new parents is very different. Almost four in five parents (79%) with children under the age of 5 would ask the family for money (79%) and three quarters (75%) would ask the family for financial advice.
From the research, Standard Life has identified three distinct types of families; "talkers" and "gifters" who are likely to benefit from discussing the family money tree and "avoiders" who are failing to release the power of the family financial tree.
"Talker families" are the 25% of the population who involve all of the generations when planning family finances – they are likely to be open with each other, discussing salaries, upcoming bills and even inheritance.
"Gifter families" are families who gift money between the generations to help with both big and small purchases. "Gifters" are also likely to be "talkers".
"Avoider families" however are the least likely to benefit from the family financial tree as they avoid money chat in their household, particularly the more difficult conversations.
Julie Hutchison, Standard Life Family Financial Expert added: "The Family Financial Tree has revealed the staggering amount of money that is shared within families every year. Grandparents and parents help younger generations with their financial needs and vice versa.
"But, despite so many people being on the family payroll, there often seems to be a barrier when it comes to having certain conversations about money. But if some of the trickier discussions do take place, around such things as inheritance or retirement, they can help to remove uncertainty and make it much easier for everyone in the family to plan ahead and make the most of their money."
Standard Life believes there are five essential conversations families should be having about money and the future:
• If someone in the family was in need of financial help, would they know who to turn to?
• Are the grandparents of the family going to be able to afford to look after themselves in old age?
• Children are expensive. As they reach adulthood, can the family help finance major life events?
• Who will look after the children of the family if anything should happen to their parents?
• Where do your loved ones keep important financial paper work, relevant passwords and their will?
Published in Articles