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Financial DiscussionsYou may have close family members who do not make good financial decisions.  They may have a lot of debt or have bad spending habits.  If you might end up passing on your property to them, you probably want to help them get their life in order, but do so in a way that does not perpetuate their problems or hurt their feelings.  Fortunately, there are ways to do that.  One option is to have financial discussions with your struggling beneficiaries to help them.

The Key Takeaway

  • Making wise decisions and avoiding best allows for spending on more important needs.
  • Being-or becoming-disciplined in financial decisions creates financial security.
  • Having financial discussions with struggling beneficiaries can help them fix their money problems and become ready to receive and inheritance.

Correcting Bad Behavior Leads to Financial Security

Only by spending less than you bring in do you become secure financially.  Being irresponsible with your finances works against becoming financially secure.  As I put it, financial instability normally does not happen at once, but it “death by a thousand paper cuts.”  It happen over time, a little here and a little there.  However, these habits can be fixed with a budget and a self-evaluation.

How to Begin Financial Discussions

Possibly the least confrontational way of addressing a beneficiary’s situation is to have financial discussions about the entire family’s financial situation as a family.  You may also want to think about finding a situation in the news similar to what you are seeing in a family member’s life as a way to lead your financial discussions.  That way, you can address a situation without singling someone out, and you also help them to realize that they are not the only person in the world with their struggles.

Actions to Consider

  • Talk enthusiastically in your financial discussion about how you have found financial success.  Share how you have saved and how you have wisely spent those savings on important needs.
  • Never co-sign on a loan with an irresponsible beneficiary.  This will impact your credit.  You should also hesitate to give a loan; this will not only decrease your wealth, but your beneficiary may develop a dependency on your money.
  • Instead of giving money, offer help to control expenses.  This is not only a great way to address financial issues, but does not put your own money at risk.
  • Have financial discussions to help your beneficiary who is struggling to understand the basic principles of finances.
  • In you financial discussions, compare your beneficiary’s situation to that of a company, and describe how every company works through a budget. Questions you might ask:
    • “Who do companies use a budget?”
    • “How does a budget help companies operate with a profit?”
    • “How do you believe that companies without a budget do compared with companies that have a budget?”
  • Walk the beneficiary through making a budget, including income, bills, categories, and priorities for remaining income.
  • Help identify spending priorities. Questions you can ask:
    • “What is truly most important to you?”
    • “What can you live without?”
    • “What do you want that can be purchased less frequently or at a lower cost?”
  • Discuss the benefits from living within budge and being able to save.  Questions you can ask:
    • “How do you think you will feel once you meet your budget?”
    • “How will you reward yourself once you meet your budget?”