I’m Financial Advisor: Here Are the 11 Worst Money Secrets You Can Keep From Loved Ones

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Money secrets can destroy relationships, and keeping secrets from your family can have devastating effects for years to come.

We consulted with a few financial advisors to get their take on what money secrets hurt clients the most. While private accounts and hidden debts are obvious, they shared with us a few secrets we hadn’t thought of.

You might be hiding a few of these money secrets without even knowing it. Here are 11 such secrets you should never keep from your loved ones.

Also see secrets every rich person knows.

Bills

Jon McCardle, AIF and president of Summit Financial Group of Indiana, believes you should share more about finances with your children, including your bills.

“Talk openly about bills, especially the way credit cards work,” McCardle said. “When to use them and when to avoid using them. The lesson I was taught was to get a couple of credit cards [as] the way to build credit. 

“The way I teach clients … is that you can gift your credit score to your children by adding them to your cards and monitoring their spending instead of just having them go get a card and spending it on … candy and food — only to find out later they should not have done that.”

Taxes

Taxes are important, and keeping the details of how taxes work from your family can set them up for failure.

“Teach [your children] about taxes,” McCardle said. “Income taxes and why they pay them and what they are used for.  Teach them about strategies that reduce your taxes, such as 401(k)s and IRAs, so that they begin to understand their biggest threat to their wealth over time is taxation.”

Budgeting

Budgeting is a foundational piece of personal finance, and not knowing how to handle your day-to-day money responsibilities can hurt your family, especially as your kids grow up.

“Use the 50/30/20 rule from Day 1 of working with [your children],” McCardle said. “Fifty percent of their check goes into savings, 30% goes to their lifestyle and — if they cannot afford it, they don’t need it — 20% goes into investing for their future self. Money is habits, and if your habits are poor or non-existent, you will learn the laws of money the hard way.”

Money Is a Tool

Teaching your family how money works is a must. Avoiding talks about income, jobs, education and how to invest is detrimental to your family’s future.

“Teach [your children] that money is a tool, not to be coveted or loved but to be earned and invested so that it works for them instead of working for it,” McCardle said. “Part of that lesson is how money arrives in their lives. First, they must invest in themselves through education, work ethic and knowledge and then they look for ways to deploy what they have learned in the pursuit of goals that are specific in nature and not vague. 

“Then, after years of pursuit, money will arrive but not before they grow themselves, creating a sound environment in which money is comfortable to grow.”

Money Mistakes Are OK

It’s OK to make money mistakes, and teaching your children this lesson at a young age can save them a lot of financial heartache later.

“Mistakes are lessons meant to be learned,” McCardle said. “If you fail to learn the lesson, you will repeat it. And the older you get, the more expensive it becomes.”  

Your Estate Plan

Eric Rodriguez, CFP and founder of Wealth Builders, LLC, thinks ignoring estate plans can be really harmful to families. 

“The whole point of an estate plan is to ensure your wishes are carried exactly how you want when you pass away,” Rodriguez said. “Leaving decisions about your money, dependent care, healthcare, pets and your remains can be a huge burden to a family at an already potentially traumatizing and stressful time.”

Health Issues

It’s important to let people support you through tough times and, though health issues are deeply personal, the medical bills can end up being a burden to family members.

“Health issues can be a very personal thing for folks, and many people consider their personal health issues a burden they’d rather not share with their family,” Rodriguez said. “That said, unpaid medical expenses will get passed down to your estate.”

Private Investment or Bank Accounts

Private accounts can be detrimental to your relationships.

“What’s the point of earning and saving wealth if your loved ones don’t know where to find it after you pass?” Rodriguez said. “Even if you don’t have plans to share it with your kin, you’ll need someone to know where you want it to go. You can’t take it with you.”

Your Debt Situation

Debt can become your family’s burden, and being clear about your personal debt can help them know what to expect, especially from your estate.

“Not saying you have to spill all the details, but you will want anyone in your inheritance line to have an understanding of your situation,” Rodriguez said. “My father-in-law jokingly tells his kids not to pick at his bones before he dies, but the truth is you don’t want to create a false sense of inheritance or unexpected debt for your family.”

Financial Goals

Sharing your financial goals with loved ones can help them support you. Set expectations clearly.

“This one will help you create and maintain boundaries,” Rodriguez said. “If your family is anything like mine, gift giving and receiving is our love language. We like to celebrate every occasion which is great, but the way we tend to do it also comes with a price tag. This can be really hard when you have savings goals or other priorities.

“Same idea goes for folks who tend to loan and share money outside of their nuclear family. Being clear about your financial goals with your family should help you to create healthy boundaries. “

Financial Literacy

Learning about money is great, but passing on what you have learned is even better.

“Share what you know about money,” Rodriguez said. “There’s nothing better than sharing your mistakes, your wins, your experiences and knowledge so that your family and loved ones can benefit from what you’ve learned along the way.”

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