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It wasn’t that long ago that most us considered religion, money, sex, politics and death pretty much off-limits when it came to polite conversation. They were no-go topics almost everywhere. These topics were avoided at family dinners, amongst colleagues and even between close friends. Today, most of us talk fairly openly about all these subjects – all bar one that is. The exception for most of us is money!
A 2015 study by ME Bank found that more than one in four Australians don’t like talking about their personal finances openly. 78% of respondents cited money as “a source of judgement and comparison between people, which can cause embarrassment, jealousy and exploitation.” Money is weird – let’s talk about it sheds some light on how prickly of a subject money really is.
Why is talking about money so hard? Why do we feel so deeply vulnerable when the subject comes up?
At the end of the day, our collective reluctance to talk about money is not healthy. There are a number of ways that being silent about personal finances can be damaging.
Firstly, it can lead to financial worry, stress and anxiety. In the above study, of those that don’t like talking about money, 78% were worried about their personal finances. We see health experts for regular checkups, or when problems arise, for clarity and understanding, and to help us actively manage whatever complications may arise and in turn, reducing our anxiety and worry about our health and wellbeing.
The same should go for money.
Openly discussing your finances with someone you trust can help you gain a better understanding of your situation, what your options are and possible solutions, which will lead to better financial management and reduced financial worry, stress and anxiety.
Secondly, being closed off about money could result in being taken advantage of. Inquiring about money can be personally useful in order to gauge whether or not you are spending too much, too little, or the average.
Thirdly, our inability to talk openly about money can cause friction in our relationships. In the same study, of those that don’t like talking about money, 66% experience tension and conflict with their partner. Over the decades, money has been viewed as a symbol of power and there is a tendency to judge others based on what they earn, their savings and how they choose to spend or invest their money. Because of this, money has become very personal and intimate to the point that, in some cases, it isn’t even spoken about between couples.
However, being open about personal finances with your partner will allow you to both understand each other’s financial position, saving and spending habits, debts and personal goals. Being on the same page means there shouldn’t be any unexpected surprises. These discussions extend beyond budgeting, bills or big purchases (like a car or home), to investments, goals and retirement, enabling couples to build a solid, mutually agreed financial plan.
Open communication about money should also extend to children. Teaching children from an early age about the basics of budgeting, spending and saving will help them build a good foundation and adopt good money habits, preparing them for the bigger financial decisions, challenges and hurdles later on in life. Being open to children about money will also teach them that money is not an off-limits topic. It will teach them that if they need help, it’s okay to reach out to someone for advice.
How to talk about money
Everyone has a different money mindset. The first step is being honest with yourself and understanding how you think and feel about money and why you are reluctant to talk about it. Understand your financial patterns. Sometimes it helps to step outside your shoes and think about your personal finances as if they’re not your own but someone else’s. Once you have a good handle on your own perceptions about money and your financial situation, the next step is talking about it with someone.
Due to the stigma around money, it can be a difficult subject to broach. The first step is choosing the right person to talk to. Because money can, unfortunately, be a source of judgement, choose to discuss your personal finances with someone you trust who has the expertise and the experience to offer the right advice. Seek understanding and insight from your discussions, rather than comparison, jealousy or regret.
If you choose to discuss money with your partner, starting off with non-confrontational questions can help get the conversation going. Questions like “What do you think about debt?” or “Have you ever thought about buying a home?” before getting in-depth into personal finance situations or habits.
Consider discussing your financial situation with a professional too who is able to take a dispassionate perspective on your affairs and can help you build out a short and long-term strategy.
Being open about money can have big benefits. The more you talk about it, the less worried or anxious you will be about it. The more you talk about it, the more likely you will be to actively manage it. The more you talk about it, the less tension and conflict you’ll experience in your relationships. All it takes is getting the conversation started.
If you’d like to get that conversation started with one of us, please get in touch. We’d be more than happy to have a chat over coffee or lunch sometime.
Disclaimer: This article contains general information only and is not intended to constitute financial product advice. Any information provided or conclusions made, whether express or implied, do not take into account the investment objectives, financial situation and particular needs of an investor. It should not be relied upon as a substitute for professional advice.