Money Talks – How to Have the Tough Conversations
“Let’s talk about money.”
Did your hands just get clammy? Are you uncomfortable? Are you trying to change the subject to ANYTHING else?
If you are uncomfortable talking about money, read on. If you talk about money and want people to stop giving you dirty looks, read on. If you think you’re perfect (you’re not), read on.
Money: The taboo topic
I’m pretty sure I am completely different from the majority of the world when it comes to talking about money. When I tell people I have a personal finance blog and am on a journey to becoming debt free, I often get blank stares in return. I’m not an alien, people! It’s no secret that I have student loan debt and am working to pay it off in less than 3 years. Why should I feel self-conscious about my finances?
Before we can discuss how money talk got a bad rap, we need to acknowledge the history of money. Paper currency can be traced back as far as 1690, before the birth of the nation! Before paper and coin currency, people would barter or exchange goods and services without using money. Popular items to barter would be animal products (hides and teeth), crops, tools, weapons, etc. It wasn’t until after the Civil War that the dollar was deemed the official United States currency. Before there was the dollar, you were only as valuable as the items you carried on your back.
Mad Men & Money
Changes in the workforce have changed how money was handled. In 1950, it was the social norm that the man of the house went to work and the women cooked, cleaned, and stayed home with the children. There were few conversations about finances at the dinner table in 1950. Fifty years later, those social norms had shifted significantly. Women were working and earning college degrees. They were able to provide for their families and contribute to the household. The one thing that stayed relatively similar was the fact that finances were rarely discussed between spouses, family, and friends.
Today, our money is accessible through apps on our smartphones and virtual currency is all the rage. From PayPal to Venmo to Bitcoins, the world of money is evolving faster than ever. We have seen a shift in the stigma from the surge of millennials on social media, blogs and all over the internet. Millennials are not holding to the taboo of money talk. Examples of this are bloggers who publicize income reports. They aren’t doing that to rub it in your face and say how much better they are than you (I hope). They do it so you feel inspired, motivated, and empowered to seek the life you want. A life where you can do the things you love and still make money. Though talking about money can seem scary, there is always a why, who and how for tackling your fears.
Why you should talk about your financial goals
There are several reasons why talking about your financial goals is beneficial. There will always be people who make more money than you and, conversely, people who make less. That is not the point. The point of talking about your financial situation is to improve your health and your wallet.
The Health benefits of talking about finances
Finances are a leading cause of stress in many homes today. Stress can lead to chronic illness and disease and often contributes to fatal heart attacks and strokes. Half the time, financial stress comes from feeling out of control of your own situation. Talking about your finances and making a plan can reduce your stress levels and help you sleep like a baby (or a kitty)!
The financial benefits of talking about your finances
In addition to the health benefits, there are also obvious financial benefits to talking about your money. It is important to find a support group of like-minded people who share their own stories of success and failures with money. This will allow you to expand your knowledge and feel more confident handling your money. Creating a network of financial professionals is a great way to get sound advice without feeling uncomfortable about your situation. Talking about money creates a more transparent environment where wage discrimination and predatory lending are harder to hide. It allows people to be informed and empowered to change their current situation if necessary.
Who you should talk to about money
You may be thinking “talking about money is all fine and well, but who do I talk to about it? How do I approach them with my financial goals without feeling judged?”
Before you talk to anyone about your personal finances, you need to know where you stand. Use our free budget worksheet that will walk you through getting your financial situation in order. It’s important you know your numbers because talking about something you don’t know about isn’t going to be easy for anyone. If you are nervous about opening up to people in your offline life, join in the conversations on Twitter or Facebook to get used to the feeling of being financially transparent.
I believe in discussing financial goals early on in the relationship. That doesn’t mean you should open a joint bank account and go wild after the first date. But at least have the conversation; “Where do you see yourself in 5 years?”, “Do you plan on owning a house?”, “When do you want to retire?”, “Do you want to move elsewhere eventually?” These are all valid questions to ask if you would consider sharing your life with the person sitting across from you.
Ryan gave me Dave Ramsey’s Total Money Makeover for our first Christmas (after 4 months of dating!) and that started our conversation. We had very candid discussions about how much debt we had and how we accumulated so much. Learning these details about your partner might also reveal underlying characteristics that may or may not be deal breakers. Though the majority of U.S. population has debt, certain types of debt can be major red flags. Gambling debt, excessive credit card debt, and defaulted loans can all be signs of unhealthy behaviors that might take more than talking to resolve.
That’s why having the conversations early on is best. You can decide if your partner’s financial goals and situations align with yours. If not, you both can still get out without having invested too much emotional energy, time, or money into the relationship.
Talking with family is a slightly different conversation, since you can’t really break up with them if they don’t share your vision. The main focus should be on your debt repayment plan and what that looks like. For Ryan and I, the conversations have revolved around not spending excessively on gifts for birthdays and Holidays. We had to ask our families to limit gifts because we cannot afford to reciprocate at this time. Our tight budget also means traveling home less. This has been especially hard for us and our families since we just moved away.
The most important (and challenging) part is getting them to understand your “why”. Ryan and I earn enough money to be able to afford to take vacations and buy whatever gifts we desire. However, we have committed to putting 65% of our net income toward our debt every month. That leaves us with just 35% to live on, and that does not afford us the luxury of traveling or buying expensive material things. It is important to get three things across to your family when dissecting your financial goals.
- What you need/expect from them
- Setting clear expectations is imperative for a productive conversation. If you leave the conversation and get a package in the mail the next week after you asked them not to send you anything else, then the expectations were not clearly laid out.
- How they can support you
- They are your family. They are going to want to do anything they can to help and support you on this journey. Don’t shut them out and think just because you are keeping a tight budget means they cannot be involved. Have weekly family dinners at your parents’ house. They get to spend time with you and you get a free meal. A clear win-win!
- Your changing values are not a commentary on their lifestyle
- Do not get defensive when they do not see it your way. Your family loves you but you might be talking like an alien right now. Don’t try to shove your beliefs down their throats. They will express their opinions and their reaction may be good or bad. Just know, you are on this journey for yourself, not them.
It is important to share your financial goals with your friends. Most people spend a lot of money going out and doing things with friends. You need them to understand that you don’t love them less if you don’t want to go out to dinner and drinks all the time. This will be hard for some of your friends and may even be the reason the friendship ends. That’s okay. Don’t be afraid to let some relationships go in order to achieve your dreams. Your true friends will be there for you, no matter what.
A good friend will listen to your financial goals and not take it as a personal attack when you decline a weekend trip to the Napa Valley. They will still call you and hang out or play board games, both free activities! It is important to remember that an occasional coffee date is not going to prevent you from retiring. Some much needed girl time away from the hubby can be good. Just make sure the money you spend is accounted for in your budget. If it isn’t, then don’t spend it.
Ryan and I have a rule that we need to run every purchase past each other if it is over $20. This allows both of us the freedom to grab lunch, coffee, etc. from our $20 weekly “fun” money. If it is more than that, we evaluate if it is a need or a want and go from there. It has helped us tremendously with curbing the impulse purchases we were both guilty of.
How to talk about finances without turning people off
Now we are to the point of actually having the conversation. You are sitting across the table from your partner, family member, or friend, and are prepared to share the personal details of your financial life. Freeze; what comes next is just as important, if not more important, than the words that are about to come out of your mouth. There is a time and a place for these conversations, and planning the occasion ahead of time will give you the best chance of a positive result.
The key components of Having the Conversation:
What it looks like
This is a conversation with people you love. If you enter into it closed off and combative, you definitely will not get the results you are hoping for. Uncross your arms, smile, start with some pleasantries. “How was your day?”, “Have you seen any good movies lately?” This may seem uncomfortable to you, but remember they do not know what you are going to say next, so play it cool. Be open and inviting with your body language. Have kind eyes, they aren’t fighting with you, don’t give them a dirty look. And remember they love you no matter what.
What it sounds like
In the words of Tim McGraw – “always stay humble and kind.” I know you are excited about your brand new journey to turn your life around, and that you just want to tell everyone all about it, but you have to be patient. Stuffing something like this down anyone’s throat will sound pretentious and judgmental. People don’t just listen to you for you, they are looking for how it’s related to them. Meaning they might hear what you are saying as a direct judgement against their lifestyle choices.
The same concept occurs when someone tries to tell you about their new diet and how much weight they’ve lost. You might start out by thinking “WOW! She thinks I’m a fatty because I just downed a pint of Ben and Jerry’s while she is crunching on carrot sticks.” In reality, they are just excited about the new journey they are on and the success they have had. People are selfish and no matter what your message is, the audience will often react badly when preached to.
Instead, try asking them questions. Solicit advice about their 401(k) plan and health benefits and ask if they have ever tried Financial Peace University. Engaging them in a conversation rather than preaching your advice will get you much farther. Now it is time to state your financial goal, making sure to include your “why”. This is important so they will understand you are not just making this goal up arbitrarily and don’t have any rhyme or reason.
“Our financial goal is to become debt free and own income properties; this will allow us to retire in 6-10 years and to pursue our ultimate dream of starting an animal rescue sanctuary.”
They will then most likely be intrigued by your big financial dreams and ask you more questions about it. Be sure to answer their questions and ask them some questions as well. This is a conversation. It is not one sided, and you will be able to get your point across without sounding like you are giving a lecture.
How it should feel
It may feel uncomfortable at first, but as the conversation flows, it should start to feel more natural. Take cues from the person you are talking with on what type of subjects they are not comfortable with. Salary, benefits, and child care can be touchy subjects for some people. Leave those alone for now and try again at a later date. Your financial goals aren’t going away and neither should the conversation.
Where it should take place
While Grandpa is carving the Thanksgiving turkey around the dinner table is NOT the best time to bring up your financial awakening. Take a more subtle approach, especially if your family is not necessarily in line with your new money values. Remember, people are selfish and might take it as a personal insult. Pull your mom and dad to the side and just talk to them about the struggles they faced and what you want out of your life. That will be a much more comfortable setting than in front of a group of people.
Also, leave the money talk out of text messages. For your friends and family, discussing your financial success over text messages can easily be misinterpreted. Take a more sensitive approach and have these conversations in person or over the phone where they can interpret your tone and inflections correctly. This will help you avoid many unnecessary arguments.
The End Result
Hopefully, by having these tough conversations you will end up in a situation like Ryan and I. Our families and friends are on board and we are working as a team toward common goals. The more we, as a whole, discuss money, the less of a stigma it will carry, and the road to financial education will be opened to more people. Do your part to share in the conversation!
What’s the most awkward conversation you’ve ever had about money? Are you fully transparent with anyone in your life?