60% of people in the UK don’t have a will. This means that if they die, the state will determine how their assets will be split up. This is not what most people would want, yet the 60% finding is consistent over time. Why should this be? Some of the reasons given are:
- They don’t believe they need a will
- They don’t want to discuss financial details with a stranger
- They don’t feel ready
But this result should not be that puzzling when you recognise that writing a will is not just an exercise in paperwork and listing assets. It’s far more challenging than that. As well as dealing with questions of your mortality, writing a will needs you to look at yourself, your life and your family – what you have achieved, and what you want to pass on. It needs you to think about money and, possibly, how to communicate about money with the next generation. This is really hard for us because as a society we don’t really talk about money at a personal level. And so, for financial service professionals Wealth Transfer and Wealth Planning are treated as technical challenges, to be solved with wills, structures and tax planning. But not talking about money with the next generation, how we feel about it, how it makes us feel, what is important to us, will lead to problems. Not just because of not having a will, but also for ourselves as parents trying to raise financially capable children. Inadequate communication and inappropriate messaging in families are two of the main reasons why a lot of wealth doesn’t last more than three generations. We need to talk about money but we don’t know how to.
However, knowing that you need to have open dialogue about wealth and going about it are very different things. At a very fundamental level, most of us find that talking about money with our children is really challenging. Some people fear they’ll raise money-grubbing kids. Others don’t know where to start and are intimidated by the enormity of the topic. People whose parents didn’t talk about money, or told them that it was evil or something that families didn’t talk about will struggle to even think about discussing it. Very often there are differing views about money among partners, so establishing a baseline ‘family’ view can be difficult. If the children have existing (or potential future) partners this adds more complexity. And, unlike investment decisions, when doing wealth planning, we need to deal with money and families, our two most emotional topics. We may need to face some hard truths and make some difficult decisions. Consciously or not, everyone avoids talking about things that make them uncomfortable or that seem too complicated to explain.
So how do we move forward? We need to start by explicitly acknowledging that our relationship with money is primarily emotional. This recognises that talking about money will produce subconscious reactions in those participating in those discussions. These reactions are usually driven by fear and most people will need help to understand their emotional drivers. Only then can you start to build a Healthy Communication Framework. This framework aims to break the cycle of reactivity that usually comes with difficult discussions by acknowledging the emotional responses that these discussions trigger, and by making each participant aware of the effect they have on each other. Once somebody gets triggered, it’s almost impossible to have a rational discussion with them. Understanding how this process works and how it can be managed is the key to healthy and fruitful communication on difficult topics. Once you have this in place, families can learn to navigate their internal and familial money dynamics from a place of self-awareness, trust, and accountability. They can discover new ways to work together to support the highest good of both individual and family needs, desires and shared endeavours; this is the framework that drives successful wealth planning.
Money Coaching looks at our patterns and behaviour around money and uses this understanding to build Healthy Communication Frameworks. All of us have an emotional connection to money that we don’t fully understand. Yet we are still expected to make logical and rational financial decisions around money, even in times of stress or emotional challenge. Cambridge Money Coaching will help you to understand your relationship with money so you can make better decisions and live a more fulfilled life.
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