There are awkward money questions, and then there's asking your parents about their posthumous financial plans. Talk about a tricky opener. Still, for many of us, the conversation is as uncomfortable as it is necessary.
According to a recent Charles Schwab survey, 53 percent of millennials believe are betting on an inheritance as part of their retirement plans. However, the same survey found that only one in five people actually receive an inheritance from their parents as expected. Grasping the reality of what to expect is one of many reasons to bite the bullet and address this sensitive financial issue. For some, gaining clarity is a way to better understand a parent's wishes, or prevent confusion down the road. For others, it might be more about present needs rather than future planning.
Whatever the reason, the important thing to remember is that your questions are just as important as their answers. So do yourself a favor and consider the following advice, courtesy of both financial and etiquette experts, before you broach the conversation.
How to Start the Talk
When approaching your folks, it's important to lay the groundwork so they have some time to consider how much they're comfortable sharing. "A good way to start this conversation is to reference a resource, such as a book or an article you read about the importance of estate planning," writes GoBankingRates's Cameron Huddleston. "You could share what you've learned or offer to let them read the resource themselves."
Another approach is to be more direct without catching them too off-guard. Suggest setting up a time to talk about the 'I' word and let your folks decide when and where to have the conversation. If they ask why you're broaching the subject, your best bet is to answer with a measure of practicality.
"My clients often say, 'My financial planner has been asking me this question, and I thought it would be relevant to you, too,'" certified financial planner and Brunch & Budget founder Pam Capalad tells The Week. If that's not an option, Huddleston suggests telling them you're looking into your own estate planning and wondering if they've done the same. This opens the door to a larger conversation without putting them too much on the spot.
Make Sure You're Not Creating Disharmony Within the Family
One concern your folks may have is betraying your siblings by only discussing the matter with you. "Do some one-on-one talks first, perhaps among siblings, or the parents with each child," Peggy Post, director of the Emily Post Institute, tells AARP. "But it's also good to get everyone together whenever possible, to make sure everything's out on the table and everyone is on the same wavelength. Even if families don't live close to each other, you can do a video (phone) call on FaceTime or Skype, or at the very least do a conference phone call. It's really good to talk individually and as a group."
The Questions to Consider
You might want to start with a broad ask: "Do you have an estate plan?" If they say yes, you might ask about how it works, rather than digging into the exact numbers. Another question you might ask is: "Are there any documents or resources I should know about in case of an emergency?" Specifically, ask about whether or not your parents have created a will, healthcare directive or power of attorney document that you might need to access, worst case scenario. If you really want to get in depth without touching too much on the actual numbers, check out this "inheritance checklist" containing a list of documents you may need to access one day. When asking your parents about such specifics, make sure you explain that you're just looking to protect their wishes first and foremost.
If You're Asking For an An Advance
It may seem like a long shot, but according to a recent Merrill Lynch retirement study, 77% of retirees now say it's better to pass on inheritances while still alive. Of course this all depends on your parents' financial situation as well as how you plan to use the money. Perhaps you're starting a business, looking to purchase a home, or helping to pay for college for a child of your own. Make sure the money you're asking for is intended to be used soundly and in a way that makes your parents feel secure and satisfied. While your parents might be happy to gift you with a portion of your inheritance, don't guilt them into it. "If you are sure that they are still competent to make this decision and can afford it, ask for a loan," suggests Philip Galanes of the New York Times' Social Qs column. "Let them decide whether to make it a gift." You should also consider asking for a small portion, rather than the entire sum—and if you have siblings, make sure you put any agreement writing so your parents don't have worry about potential disputes in the future. Remember, this isn't just about your needs but theirs as well.
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Home garden and porch
As anyone who has ever sold a house will tell you, you must prioritize curb appeal. Before a potential buyer even considers looking inside your house, they notice the outside first. Does it attract the right kind of attention? Does it take away from the feel you're going for? If you plan to sell sometime soon, you must think about these things. Here are some landscaping options to increase your home's curb appeal, so you can get the best price on your home.
Extensive Plants and Greenery
A barren front yard won't get you the price you want on your home. So, invest in at least a little bit of greenery to keep the surrounding area from looking too dead. Shrubs and bushes tie the house to the lawn that precedes it, and flower beds bring a pop of color to an otherwise drab structure. You can also strategically plant some trees to improve the overall feel of your home's exterior.
Lawn Care
As we mentioned, your lawn is one of the most prominent features of your home's exterior. A patchy, dried-up lawn will quickly drive your home's price way down. Some of the best landscaping options for your home's curb appeal involve improving your lawn for the next inhabitant. Overall fertilization, ground aeration, underbrush removal, proper mowing—all of these lawn care tasks contribute to a greener and more lively area that invites people to see your house, rather than stay away from it.
Paved Pathways
There's nothing like a broken and disheveled pathway to make someone think twice about buying a property. Just as you want the entryway in your house to be welcoming, so too should the pathway leading up to the house be inviting. The pathway from the street to your front door provides plenty of real estate to get creative with. You don't have to settle for a boring concrete pathway. Consider something more eye catching, like a cobblestone path or intermittent brick patterns, as a way to better welcome potential buyers.
Usable Outdoor Furniture
Landscaping doesn't just involve the ground you walk on; also included are the items you use as extras to the overall look. Outdoor furniture is one such extra that you don't necessarily need but can look quite attractive if done correctly. Staging is important with outdoor furniture. Old, broken-down pieces will only look like more work to the potential buyer. A few comfortable chairs, a bench, or a table with an umbrella really go a long way to improving your outdoor aesthetics.
A good tip for deciding on curb appeal items is to decide what you personally would want to see as a part of a welcoming home's exterior. You don't need to go overboard, but a little bit of forethought could net you quite a lot of extra cash in the sale.
Unfortunately, giving back can sometimes go haywire. If you're ready to make a donation, first consider common mistakes made when giving back.
Many people strive to support their community by donating their time or their money. When you find a meaningful cause, you might be quick to cut a donation check. Though it's admirable to be quick to act charitably, you should be wary of several common mistakes made when giving to charity. Being mindful of these mistakes and learning tips for making informed charitable choices can help you make the most out of your generous check.
Acting Quickly Out of Emotion
Mission statements are meant to be compelling. If you're an emotionally driven individual, it's natural to pull out your wallet at the sight of a sad puppy on TV or when informed about food insecurity over the phone. Unfortunately, not all charities are as effective or official as they may seem.
Take your passion for helping others one step further by making sure your chosen charity is legit. Speaking with a representative, reviewing their website and social media accounts, and looking at testaments online can give you a better idea of whether the organization is worth your donation.
Forgetting to Keep Record of the Donation
Don't forget that you can reap some financial perks from giving back! With the proper documentation of your donation, you can acquire a better tax deductible.
If you donate more than $12,400 as a single filer or $24,800 as one of two joint filers, you're eligible to deduct that amount from your taxes. So, when a charity asks if you'd like a receipt of donation, always answer yes.
Donating Unusable Materials
Most charities can utilize a monetary donation—it's the physical donations that usually cause some issues. Providing a local nonprofit with irrelevant materials or gifting them with unusable products are surprisingly common mistakes made when giving to charity.
Always check your intended charity's website for a list of things they do and do not accept. The majority of places will provide a guideline to donating or offer contact information to clarify any questions.
Strictly Giving at Year's End
As more and more people get into the holiday spirit at the end of the year, nonprofit organizations see an influx of donations. While it's great to spread holiday cheer via a monetary donation, it's important to keep that spirit going year-round.
With regular donations, charities can more effectively allocate their annual budget. Setting up an automatic monthly donation with the charity of your choosing can maximize your impact. You can account for a monthly donation by foregoing a costly coffee every once in a while.
Knowing how much you should spend on home maintenance each year is hard to figure out and may be preventing you from buying your first home. The types of costs you'll incur depend on the house you buy and its location. The one certainty is that you should start saving now. Read on to figure out how much to start setting aside based on the home you own.
The Age of Your House
Consider several factors when budgeting for home repairs. If you've purchased a new home, your house likely won't require as much maintenance for a few years. Homes built 20 or more years ago are likely to require more maintenance, including replacing and keeping your windows clean. Further, depending on your home's location, weather can cause additional strain over time, so you may need to budget for more repairs.
The One-Percent Rule
An easy way to budget for home repairs is to follow the one-percent rule. Set aside one percent of your home's purchase price each year to cover maintenance costs. For instance, if you paid $200,000 for your home, you would set aside $2,000 each year. This plan is not foolproof. If you bought your home for a good deal during a buyer's market, your home could require more repairs than you've budgeted for.
The Square-Foot Rule
Easy to calculate, you can also budget for home maintenance by saving one dollar for every square foot of your home. This pricing method is more consistent than pricing it by how much you paid because the rate relies on the objective size of your home. Unfortunately, it does not consider inflation for the area where you live, so make sure you also budget for increased taxes and labor costs if you live in or near a city.
The Mix and Match Method
Since there is no infallible rule for how much you should spend on home maintenance, you can combine both methods to get an idea for a budget. Average your results from the square-foot rule and the one-percent rule to arrive at a budget that works for you. You should also increase your savings by 10 percent for each risk factor that affects your home, such as weather and age.
Holding on to savings is easier in theory than practice. Once you know how much you should spend on home maintenance, you'll know what to aim for and be more prepared for an emergency. If you are having trouble securing funds for home repairs, consider taking out a home equity loan, borrowing money from friends or family, or applying for funds through a home repair program through your local government for low-income individuals.
