The importance of talking about money has never been more significant. The last two years have been tough for many, and unfortunately, millions of people’s finances have been affected by Covid-19. Everyone’s situation is different, some have to tighten their spending a little, some have been able to save, while many have unfortunately found themselves unemployed, unable to pay their bills, and in some tricky situations. One thing remains the same: talking to those close to you about money is crucial to avoid your financial problems getting out of control.
University College London surveyed 15,000 people in 2015. The results showed that people are seven times more likely to tell a stranger intimate details about themselves than to discuss how much money they earn. Crazy, huh?
This may be unsurprising, as it has historically been considered rude to talk about money. Although attitudes are slowly changing. As a company that ensures people have control over their finances, we must reinforce the importance of talking about money. Here are just three reasons why we feel it is so important:
1. To teach financial literacy
The importance of talking to our children about money is enormous. Studies have shown that the earlier a child is introduced to the responsibilities of money, the better they will manage it in later life. Earning money and knowing how to budget and save are crucial life skills that can and should be taught from a young age.
This could start by being transparent about your family’s financial situation and teaching the value of money, allowing children to do mini jobs to earn pocket money and choose what they want to purchase, or introducing them to investing and watching their own pot of money grow. There are many things you can do to ensure that money isn’t a source of stress or confusion for your children as they become adults.
2. To improve our mental health
Financial worries can burden our mental health and lead to severe mental illness if we do not ask for help when needed. Never bury your head in the sand. Financial problems do not disappear. It is important to address financial challenges directly by talking to the right people and asking for support.
It can be an empowering and emotionally rewarding experience. The first people you should turn to could be a partner, family member or close friend. Never be afraid to ask for help. If you do not have this support network, there are many specialist organisations with whom you can speak in confidence and free of charge.
3. To make better financial decisions
The more honest you are with yourself and your loved ones, the better the result will be. For example, someone ashamed of a poor credit rating can withhold this information from their partner. Until it comes to a joint mortgage application or joint account that could be rejected, but if they had spoken earlier, they could have taken steps to overcome the credit difficulties before they bought a home.
There are many ways to make better decisions if you’re transparent about your situation. But it first requires you to be open, honest, and ready to tackle it!
How to talk about money
Ready to talk finances with your family or partner? Here are a few tips to prepare for the conversation:
The perfect time to talk about money is probably not during busy moments, like after work or bathing the kids. So choose wisely.
Don’t pick a moment when one of you is stressed, tired or in a rush. Instead, choose a moment when you’re both in a chilled environment, feeling positive and having energy. Maybe a Saturday or Sunday over a planned lunch?
While you are encouraged to talk openly about money with your family or partner, you may not feel so comfortable talking about it in the presence of others. So make sure you are at home alone, walking, or in a quiet cafe.
If you do not live together, you might also want to hold your conversation on “neutral territory” – i.e. not at one of your homes. This can help calm both minds and create a neutral atmosphere.
Talking points or goals
Have you ever left a meeting feeling like it was a complete waste of time? Poor meetings often result from unclear agendas and poorly defined goals.
If you want to discuss several factors, you should split them into several conversations. In this way, each discussion’s “agenda” and goals should be crystal clear and give you more time to have a proper conversation. Try not to finish the conversation until your goals are met, or re-schedule some time to discuss it further.
Start the conversation
Once you are clear about what you want to get out of the conversation and know where and when the best time is to have it, it is time to start.
Bear in mind everyone’s different. Some will be fine talking about money at the drop of a hat, while others might prefer some warning. Suddenly asking “What’s your credit score?” as you’re having dinner after work may not result in the answer you expected. If you believe the other person would appreciate a heads-up – and we dare say many will – think about introducing the idea of talking about money gently and agreeing on a time to discuss it.
However, sometimes waiting for what can be perceived as an “important chat” can cause much anxiety. So you may decide it’s the best approach just to come out and say it. That’s fine, too, so long as you do it at the appropriate time and location (as explained above).
You’ll likely know the other person well, so use your judgment to decide the best way forward. Remember:
- Take turns to speak
- Be honest
- Be aware of emotions
- Agree to any further actions.
Consider writing down any actions that you need to take before the conversation concludes. This might include:
- Researching a particular question or topic
- Calling a bank or loan provider
- Downloading a credit report
- Gathering relevant paperwork
- Seeking help from a support organisation
How to talk to your partner about money
Talking to your partner about money can be part of a healthy relationship. Regularly discussing your finances can help you deal with minor problems before they become bigger ones. So try to find time to make it part of your routine, perhaps agreeing to talk at brunch or on a long walk monthly.
If you are in a more urgent situation or require a “bigger” discussion, consider following the abovementioned steps. The advantage of knowing someone well is that you will probably have a clear understanding, which will allow you to avoid the emotional pitfalls that can get in the way of a productive conversation.
Talk about your finances, and don’t be afraid to seek advice!
Money can be confusing and complex at the best times, and it can be traumatic when you have financial difficulties. Sometimes talking about money is not enough. Further advice is needed, or perhaps you need a neutral ear for advice.
To schedule a no-obligation consultation, get in touch!
Ross Whatnall is CEO and co-founder of GSB and a highly experienced private client director. Ross holds many insurance and investment management qualifications, including CISI, CII, LIBF and CFA. He started his career in private banking with HSBC in the UK before moving to the UAE in 2013 to focus on serving his private clients.