The Emotions of Money — With rising college costs, delayed retirement plans and everyday financial conflict, parents are often at odds about just what to pass on to their kids—and how.

By Ilana Polyak
Illustration by Carl Wiens

Greg Roemer, a Thrivent Financial for Lutherans financial consultant in Washington, D.C., asked his clients, a professional couple in their 40s, to do some homework prior to their first planning session. He asked them to summarize what they were hoping to accomplish with their money. When the three of them sat down to talk, he realized the assignment wasn’t as straightforward as he’d imagined.

“They said, ‘Greg, we just don’t have an answer for you,’” Roemer recalls.

Normally, Roemer expects to hear couples rattle off a list of goals: retirement, home buying and paying for college.

Not this time. The couple was conflicted about whether to fund college for their two grade-school-age children. The wife had put herself through school, taking out loans and working a series of jobs in order to do so. She had missed out on many of young adulthood’s rites of passage because she was punching a time clock. But she also felt the experience ingrained important values—hard work and self-reliance chief among them.

Her husband, on the other hand, had parents who paid for his schooling, giving him the gift not only of an education, but also of time to pursue personal interests and extracurricular involvement—time that he otherwise would have spent working his way through school.

The pair wasn’t “at each other’s throats,” says Roemer, but the tension was evident.

“They both felt that they had been given something very valuable from their parents, and they wanted to pass that on to their children,” he says.

Finding solutions to money issues is not just about entering numbers into a spreadsheet, Thrivent Financial representatives will tell you. People’s financial choices are often a reflection of their values, and that, quite naturally, can lead to hard-to-navigate emotional challenges.

Differing Priorities
Even between couples who see eye-to-eye on most personal-finance issues, it’s not uncommon to discover areas over which they have money-centered disagreements.

A few years ago, for example, Roemer worked with a married couple contemplating a home purchase in Washington, D.C. The wife, a smart and stylish Midwesterner, desperately wanted a more expensive, centrally located condo. The husband, who was used to the spare living quarters of his bachelor days, wasn’t interested in making the extra investment.

“Budgeting for a new home is often an area of conflict,” Roemer says. Some clients may place more value on “nesting,” others may crave the status that comes with a nicer home. This isn’t surprising, considering that a home is often a couple’s biggest investment—one that’s costing consumers more than ever before. Single-family home prices rose almost 89 percent nationwide in the last 10 years, about twice the rate of salaries, according to the National Association of Realtors.

So what happened with Roemer’s newlyweds? In the end, the wife conceded that buying the nicer condo wouldn’t make financial sense; prices were too high, and the pair was planning to move out of the area within two years. When they finally relocated, they were able to buy a condo similar to the one they had been looking for in Washington, D.C., but for a much more affordable price.

Feeling the Squeeze
The reason behind the growing amount of tough financial choices facing Americans today is probably simple: “There’s just not enough money to do everything,” Roemer says.

Consider college funding. You certainly don’t need a Ph.D. to know the value of a college degree. The College Board, the organization that administers the SAT, recently reported that college grads earn 75 percent more throughout their lifetimes than people who only finish high school.

But this staple of the American middle class is getting increasingly out of reach for many parents. College costs rise about 6 percent a year—twice the rate of overall inflation.

The tab for a four-year private university degree for a child born in 2006 will run about $287,000 in 2024—roughly $72,000 a year, according to calculators from the College Board. (State schools cost about 75 percent less.) Add in the cost of books, travel and health care, and the bill for a four-year degree might easily top $300,000. Then there’s the popularity of advanced degrees. What if your little scholar wants to pursue a graduate degree, say in medicine or comparative lit? That easily could take 10 years to complete.

Now consider our longer life spans. According to the National Center for Health Statistics and U.S. Census Bureau, 26 percent of Americans reaching age 65 in 2000 could expect to reach age 90. In 2050, the probability will increase to 42 percent. That puts 40- and 50-year-olds in a tight spot: They must fund ever-rising college costs while also providing for a much longer retirement than their parents even conceived of. It’s a potential “perfect financial storm” that only savvy financial planning can help offset.

Passing on Values, Not Just Money
So in the battle between different needs for your hard-earned dollars, how do you make the decisions that are right for you? “If the conflict is between retirement and college funding, most financial professionals would say you should prioritize retirement,” says Mary Quist-Newins, a Thrivent Financial senior financial consultant in Rockville, Maryland.

Quist-Newins points out that children can find sources of college money other than the Bank of Mom and Dad. Student loans, scholarships and work-study are all viable options. Working with a planner can unearth even more dollars for school. In total, there is some $129 billion available in financial aid, according to the College Board. But there are no such programs for retirees. Once you stop working, you must fund your lifestyle through your own savings, along with Social Security and any pensions you might have.

But there’s more than just dollars behind Quist-Newins’ advice—there’s also the aspect of passing along financial values. “I think it’s important that children have some degree of responsibility about their education and have ownership of it,” she says.

Not all parents see it that way. Some may feel that they are shirking their parental duties and saddling their children with future debt if they don’t pick up the higher education tab. Or they may feel as though they aren’t measuring up in the eyes of their friends and family—especially if their own parents paid for their higher education.

Whatever their approach to college funding, parents should be candid with their children early on about how much they will be contributing to the cost, Quist-Newins advises. Doing so, she says, can mitigate some awkwardness later on. “You have to be very clear with your children, so they can share in the decision-making,” she says. After all, you’re not only making an investment in your children’s future education, you’re also making an investment in your children’s future appreciation for money and the many opportunities and challenges it can bring.

Ilana Polyak is a New York City–based writer whose work has appeared in The New York Times and Money magazine.

Tough Talk — 4 helpful tips for discussing money with family members.

We love our family members, but talking with them about tough financial topics is as much fun as being stuck together on a 20-hour road trip—with no radio or air conditioning. It doesn’t have to be that way, says Scott Wisgerhof, manager of core needs and retirement planning services with Thrivent Financial for Lutherans. In his 10 years working with Thrivent Financial members and representatives, Wisgerhof has seen how the thorniest of family financial topics can be discussed openly and respectfully with enormous benefit to everyone involved. Here are a few of his suggestions.

1. Practice makes perfect. Money should be talked about regularly—not saved for formal discussions or confrontations. Take the fear factor out of your family’s finances by “talking about your monthly financial statements like you talk about the cost of your grocery list,” Wisgerhof suggests. It doesn’t mean the children have to know every detail of your financial picture. “But when families are well versed in communicating openly about the small financial stuff, the bigger things are much easier to tackle.”

2. Plant the seed early. A preteen will handle the news that you don’t plan on funding his entire college education much better than will an 18-year-old about to graduate from high school. “Look for natural opportunities to talk with your children about money issues that affect them,” says Wisgerhof. “When an older cousin leaves for college, tell your eighth-grader that someday she’ll also go to college, and that you’re already saving money to fund a portion of her education. And then talk with her further about how she can begin saving to provide her portion.”

3. Don’t lecture. Whether your children are tots or in their 20s, avoid the temptation to start conversations with, “You don’t know how lucky you are…” Rather, share personal stories that illustrate and prepare them for challenging financial situations. Kids will get a kick out of hearing how Mom survived on mac-n-cheese and monthly bus passes during her first year in the workforce—and how she wouldn’t trade the experience for the world.

4. Involve a professional. When facing big money issues—budgeting for a home purchase, conflicting opinions on investing, a job loss—bring in someone who can objectively guide the discussion and help you make smart choices. “A Thrivent Financial representative is just a phone call away,” Wisgerhof says. “A lot of emotional upheaval can be avoided when families involve an objective, informed, experienced third party.” 

— Heidi Pearson