It’s up there with religion, politics, sex; the list of ‘taboo’ subjects, or is it? In the world we live in today, money is more like the greatest taboo of all! Why?
If as a society we have ‘comfortably’ moved past the reservations around most taboo subjects, why does money still rein as the most undiscussed subject? Who benefits from this? Who loses? Why are we so afraid?
In a capitalist environment, what you have or earn says a lot about your success. Whether that is right or wrong is well and truly open for debate, but the fact remains. So, is this ‘measure of success’ what we are worried about sharing?
And if what we earn says something about us, then what does what we spend say? Are we embarrassed by our spending choices? Are we worried we will embarrass someone else by sharing an expense they couldn’t afford?
When money is easy to talk about.
Deals, bargains, tough negotiations. Yep, all of those are things you will hear your mates share stories about. There is an element of pride associated with getting what you want for less than the next guy.
Who loses by keeping silent?
We first learn about money at home as we grow up. We learn about what we can have. We learn about what we have compared to others. We identify money with emotions as we see it play out (be it excitement over a raise, stress over a mortgage, fear over an unexpected cost, anger over an unplanned purchase). When there is no conscious education to go along with it, money can take on a life of its own in our minds. As we grow up and enter the world of earning and spending independently, all of those learned money behaviours will be at play, whether we are conscious of it or not. When you don’t understand the basic principles of money, you lose, end of story.
“I always thought I would be a very open parent when it came to money”, says Pat, a client. “But when my 7-year-old daughter asked me how much I earn, I stumbled. I was afraid to tell her, I was worried she’d tell her friends or that the information would spread without context and either I or someone else we knew would end up embarrassed by it. I don’t really know why I froze, but I can tell you I didn’t tell her. My reaction surprised me.”
Who wins when we keep silent?
In nearly all aspects of life, we learn by sharing knowledge. As a society we have never been in more debt. We have never paid more for a home in relation to what we earn. We have never had so many temptations. We have never had so many options of what to buy and ways to go about buying it. If we aren’t being open about how to earn and manage our money, how will we learn? How will we keep each of us from making the same mistakes, or even worse, amplifying the ones of our ‘role models’.
While you may not want your primary schooler armed with your annual salary, there absolutely are productive money conversations to be had. When we keep it all to ourselves; we miss out on teaching our family and learning from others. No one wins by keeping it all to yourself.
As a financial advice business, we work with people’s emotional connections to money all the time. People come to us because they are afraid. They don’t know what the future will hold and if they will be ok. They come to us because they are angry. They are sick of fighting as a couple about how they spend money and they want a plan they can work to that will meet both party’s needs. They come to us because they are excited. They have just got a bonus, or a raise, or an inheritance and they know it will make a difference to their future; but they don’t want to end up feeling guilty that they wasted the opportunity.
When we don’t talk about money with our family or friends, who can we turn to? At least with an adviser, they have seen it all before! And they know how to help.
So when it is ok to talk about money
“the idea that money should not be discussed is a misnomer for all of us with exception to those for whom money is no object”
That quote sums it up perfectly, the answer to ‘who should talk about money’ is EVERYONE! You have nothing to gain by keeping your concerns to yourself, and everything to gain by being open and honest with yourself, your loved ones and those you trust.
“The relief I see on clients faces when they have been in for their first few meetings and really got their cards on the table, is absolutely palpable.” Chris Andersen, Invest Blue Gladstone Financial Planner. “You just see this weight being lifted off their shoulders. Money is not everything, but it can hold a lot of power over us. When you understand your position fully and have a clear plan moving forward you take that power back.”
When you need help
- You are unsure, or even scared about what your future holds
- You feel like you are out of control
- You are not sure what to do with your surplus
- You have made a mistake (bad investment, overspend, etc)
- You recognise that you have habits that contradict what is most important to you
- Actually, nearly everyone needs help! If you have an income, maybe some debt, and you want to confident about your situation and future, you need to talk!
When you can help
As a parent, you will play a very significant role in how your child grows up viewing money. Start by building some great examples through the right habits.
- When you have children, teaching them about the basics like saving as a family
- When you can see money is causing someone stress
- When you think things are not ‘adding’ up
- When you have had a great experience or lesson and think others would benefit by knowing
When someone wants to borrow money from you
The bank of mum and dad is Australia’s 8th largest lender! If you have a good friend or family member asking to borrow money, and you are wondering if you should help, you need to understand the risk:
- What are the terms?
- What is the likelihood of repayment?
- What happens when there is a default?
To keep your family informed (estate plans)
- Giving those close to you a heads up of what to expect and your reasoning is important
- Ensure those with responsibility are aware and know what your expectations or intentions are
- Be clear about your ‘hows’ and ‘whys’ of your estate plan
When you are in a committed relationship or have shared financial responsibilities
If you are in a relationship, you absolutely need to be talking about money with your partner. There are legal implications that each of you are bound to, never mind the emotional strain when you are not on the same page. Having clear understanding, mutual respect and a united vision for your financial future makes for a great relationship foundation. Make sure you understand:
- What is most important to each other (travel, stability, freedom to take time off, save for a family, …..)
- Spending commitments and habits
- Savings objectives and timeframes
- Debts or other responsibilities
- How to make the different views work together
So, now that we know when we should be talking about money, let’s look at HOW to talk about it.
how to talk about money
Tell us what you think
At Invest Blue we are interested to learn more about how we can help the conversation around money. If you have 5 minutes we would love to hear your perspective. Tell us your views on the money conversation here.
If you would like to speak with a financial planner about your money and how it can help you to live your best possible life, get in touch.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.