DEBT TALK: HOW COMFORTABLE ARE YOU TO TALK ABOUT DEBT WITH YOUR FAMILY?
Thomas found out his dad was deep in debt after his death. Auctioneers showed up a week after his father’s funeral demanding money. Besides the accumulated hospital bills there were bills piling up. Even in death, debt still taunted the family.
Like Thomas, most African families hardly talk about debt. Money discussions are so uncomfortable that asking your parents if they have debt accumulated may be interpreted as disrespect. How then do you break the ice on discussions around debt?
Talking about debt as a family
The saying it is not what you say but how you say it summarizes it all. Discussions around money do not have to be personal attacks. Sitting down with your loved ones to talk about their future is in fact, caring about them. Here is how to start a conversation around debt according to Steve Down;
1. Reassure them that you have their best interest at heart thus, you will appreciate discussions around debt.
Vital questions to ask your parents ;
- Do they have a mortgage?
- Did they take a loan to build the house?
- What is their plan in repaying the whole amount?
- Over what period is the loan supposed to be repaid?
- Who is their next of kin in case the loan is not paid on time?
I can imagine the look on your face while reading this. Given that asking such questions to African parents especially may end up badly. For more Africans to be in positions of creating sustainable wealth, more of these uncomfortable discussions need to happen.
2. Invite a third party who is a professional in debt-management
Discussions around debt do not have to be uncomfortable. Inviting a third party to break the glass around the discussion can equally be helpful. Wealth coaches like Steve Down take you through the subject. They will help you plan and put your finances in order as a family. This ensures everyone is in a position of progression financially.
3. Assure them conversations around debt are for the good of future generations
Most black professionals are unable to build generational wealth. According to Trevor Noah, black tax impacts black professionals negatively. Instead of catering to their needs and building a solid foundation for their children; they have to ensure their parents and generations before they are financially stable.
This easily gets young professionals into debt. It is important to help your parents understand the importance of creating sustainable wealth.
Key issues to discuss around debt with family
1. Health care
As we get older, we become prone to sickness. It is important to have;
- A comprehensive health insurance
- Emergency funds to cater for health care
- Life insurance
Most people get into borrowing after their elderly parents fall ill. While we assume this only happens to other people, it is important to plan for this. Invest in a comprehensive medical cover that will cater to all their needs. This will cover expenses you would’ve needed to borrow loans for.
2. Life-insurance
Death is a scary topic. Africans regard death as the most devastating tragedy to a family. It‘s natural to feel this. But it’s also wise to anticipate it and see it as an inevitable phase in our lives.
Most times, we are caught off-guard by the death of our loved ones. Like every other ceremony, we will be expected to contribute towards proper send-offs. This may get us into debt or interfere with our monthly budgets. So how do you plan for this?
- For your loved ones, discuss life insurance. As uncomfortable as it will be, contribute towards it.
- What are their wishes in the case of death? As a society, we are yet to conform to other burial rights given to our loved ones. But considering cheaper options in the case of death may be a solution to keeping other generations off loans.
3. Retirement plan
According to the Association of Kenya insurance, only a third of Kenyans are prepared for retirement. A majority hope to retire by 58. Given the disparity of wealth distribution in the country, it is impossible for 90% of the population to be self-sufficient during retirement.
A report by Oxfam International indicates that less than 0.1% of the population (8,300 people) own more wealth than the bottom 99.9% (more than 44 million people). The richest 10% of people in Kenya earned on average 23 times more than the poorest 10%.
With this in mind, it is important to prepare adequately for retirement.
- Get a wealth coach to take you through feasible investment options that will generate income for your parents even in old age
- Ask them what they intend to do when they retire
- Ensure they have income-generating activities to provide finances for their needs
Your Journey in financial fitness helps you change the way you feel, think and act about money. Good debt management is the result of this money mindset. This is why we offer an online program with the “Debt-free for Life” step to ensure you learn sustainable borrowing, evaluating personal debt, identifying debt risks and rewards and managing and clearing outstanding debt between 2–5 years.
Let us know how you talk about debt in your family. Leave a clap and share with your family and friends. Stay financially fit!
