Eight simple questions to broach big money matters

Money can, let’s face it, often be a bit of a taboo. From enquiring about the size of your other half’s pension to getting a friend to pay back that money they owe, lots of us find talking about money a little “un-British”.

In fact, interactive investor’s Great British Retirement Survey found that only around half of us (52%) regularly discuss issues such as pensions and savings with our families, compared to 37% who discuss money matters with friends.

But whether you find talking to people about money impolite or just stressful, dodging the issue can have a significant impact on not only your wealth but your well-being too.

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Talk Money Week – which runs from 6 November – encourages people to be more open about their finances, and this year it’s urging everyone to do “just one thing”.

To help you and your loved ones get talking, check out these conversation starters for a range of matters you might all benefit from discussing.

1) Can I help you out with money?

If you have adult children who are struggling with money, perhaps to buy or improve a home or just to pay the bills, giving them some financial support could benefit you both. If your estate is likely to be subject to inheritance tax (IHT) at 40% when you die, giving your children money could kill two birds with one stone. Not only will it help them now and let you see them benefit from that gift, it could also reduce a future IHT bill.

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2) How much do you earn?

This is a hugely personal question and certainly not one we should be asking everyone. But if you are in a new-ish relationship and are thinking about setting up home together, it’s important you both understand how much each of you earns. Only then can you work out how much you can afford to spend and how you will split the bills. The same can be said for debts – keeping debts hidden from a partner can cause huge problems over time both financially and emotionally.

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3) What would we do if one of us was sick or worse, died?

Nobody will relish talking about death, disease or disaster, but if you are married or live with a partner, it’s essential to face up to it. Savings and insurance (such as life and critical illness cover and income protection) can provide a financial cushion but you can’t make one without a discussion around your worries, your existing reserves, and the support that either of you might have from your employer.

4) Is there anything you would like to save for?

An important part of teaching children about money is to encourage them to save. But while opening a bank account for them is a great first step, its value might be limited if they have no concept of what they are saving for.

Instead, encourage them to put money away for a specific thing they would like to buy but can’t currently afford. You can incentivise reluctant savers with a better rate of interest than they will get from the bank, like a £1 top up for every £5 they save. By helping your children set short-term savings goals, you can teach them an important lesson in delayed gratification and help them understand the benefits of not spending every penny they have.

5) What happens to all our money?

This can be a tricky conversation for couples to broach – especially if you have different attitudes to spending – but it’s an important one, especially if you are regularly going overdrawn or feel you should be putting more away for the future.

The key is to approach the problem together, as a team, without blaming or judging the other for spending unnecessarily. It’s also helpful if you can both agree to make cutbacks and identify areas you can trim together. It’s normal to have different financial priorities, but by talking about why something is important to you, you will both find it easier to compromise.

6) How big is your pension?

Don’t be shy asking your partner how much they have saved for retirement. If you are retiring together, you need to plan together and there’s little to gain by being guarded about the size of your pot. By regularly talking about retirement savings throughout your working lives it will be easier for you stay on track and avoid a last-minute panic.

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7) Have you thought about care?

If you have elderly parents, you will invariably worry about their health, but you will also need to think about their potential need for care and how that might be paid for. Some people might get local authority funding, but whatever your parents’ financial circumstances, it’s sensible to have a frank conversation about both money and their preferences about their care.

For example, how important is it for them to remain in their own home, or is there a particular care home they know and like? Again, it’s not a conversation that anyone will relish, but it’s always helpful if you can have a plan before it becomes an emergency.

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When care plans are arranged at the last minute you might find that options are limited or that you don’t have the time to really think about the best ways to fund that care. It also makes sense to arrange power of attorney if you haven’t already. This will ensure that you can handle their finances and make decisions around their health, if they are unable to do so themselves. It’s a good idea to involve siblings, if you have them, in any conversation, to reduce the risk of problems down the line.

8) Have you updated your will?

If you are getting married or moving in with a partner and either of you have wills naming exes as beneficiaries, then it’s important you both update them. The same applies for any pensions that you might have.

Money left in defined contribution (DC) pensions can be passed on to your loved ones when you die, but as this money does not form part of your estate, it cannot be included in your will. For this reason, you need to tell your pension provider who you would like to receive this money using an “expression of wishes” form and update it whenever your circumstances, or preferences change. Your pension provider does have the discretion to distribute this money how it sees fit, but there would need to be mitigating reasons to go against your wishes.

If you have remarried and have a defined benefit (DB) pension (like a final salary scheme) you should also let them know. This type of discussion is particularly important for older couples starting new relationships, but these issues might also be worth raising if you are the parent of an adult child that is going through a divorce. If they don’t update their will or pension, their money could also be passed on to their ex when they die.