How to Talk About Your Finances

How often do you talk about money with someone other than your financial advisor, Money Mentors counsellor/money coach or yourself?

Hint: You’re probably not talking about it often enough!

There are so many reasons why the topic of money isn’t brought up in normal family and social settings, a few of them being:

  1. It’s taboo
  2. You feel judged
  3. It’s uncomfortable/scary

For so long we’ve been told that our finances are a private affair and that there’s no reason to include others in the specifics. And because of this hesitancy to be open about this aspect of our lives, it makes our finances seem bigger and scarier than it actually is. By opening ourselves up, we risk being vulnerable and having our actions, fears and situations judged.

Simply put, no one likes to be pushed out of their comfort zone.

But sometimes that’s exactly where the magic happens.

By bringing up the conversation of money with a partner, family member or close friend, you’re putting yourself back in the driver’s seat. You’re taking back that control.

With the help of Red Deer Money Mentors counsellor, Yve, here’s how you can bridge that gap between those in your life:

Talking money with your partner

The Problem: Only half of the partnership handles the finances.

The Fix: “Couples need to communicate with each other about their finances, even if that’s simply walking the other person through the steps each paycheque. However, the better alternative is to give each partner responsibilities each month so they both understand the full financial picture.”

 

The Problem: Not knowing what your partner’s money personality is.

The Fix: “It’s critical in new relationships to learn what type of spender or saver your partner is. If one of you is an ‘instant gratification’ sort of spender but the other is more geared towards long-term savings for the future, you must make sure both party’s needs are being met while being realistic. Otherwise you run the risk of the ‘instant gratification’ spender using funds carelessly by only thinking of the moment instead of the future. By sitting together to discuss short-term and long-term financial goals and how to get there, both partners can feel heard and understood, while working together to achieve financial success.

 

The Problem: Keeping your personal finances a secret.

The Fix: “I have seen scenarios in new marriages where they keep their finances divided and one party is secretly hiding the debt that they have out of fear their partner will be mad or leave them. Secrets are not healthy, and it creates stress and worry for the person who is trying to keep it under wraps. It ultimately unravels when the debt is no longer manageable and when the partner finds out, they feel betrayed and, in some cases, ends up leaving the relationship anyways. When two people decide they want to be each other’s life partner, it is based on honesty and trust. So before moving in together or getting married, it’s best to just lay out all the cards and be up front about your finances.

Talking money with your children

The Problem: Not identifying clear financial goals

The Fix: “It’s important to be honest with your children when it comes to planning for big family goals, like vacations. Prepare a savings plan and let your children see your goal regularly. If you’re planning to go on a family vacation, tape a photo of the location to your fridge and use that as inspiration for your children. If they ask to go to the movies one day, you can remind them of that photo and see where their “wants” fit in with the big financial picture. Walk them through the theatre’s website to narrow down how much tickets and concession snacks will cost and then offer alternatives like watching a movie at home with homemade popcorn instead. Pose the question, “Would you rather us put that $50 towards our vacation instead of a movie?” Children are sponges and teaching them money concepts like this early in life will help them build strong money habits in the future.

 

The Problem: Bailing your adult children out of financial rough spots

The Fix: “Parents, of course, want the best for their children. And many times this leads to exhausting their own finances to help their children out. I’ve seen it happen when the retired parent ends up owing a significant amount of money on credit because they’ve helped their adult children too many times. I often remind my clients that if their child does not learn how to fall, they will never successfully walk. I encourage parents to talk to their adult children and let them know they can’t sacrifice their own financial stability anymore. If your children are having a hard time dealing with their finances, refer them to a Money Mentors online course or a Money Mentors counsellor or money coach.

Talking money with your friends

The Problem: Trying to keep up with the Jones’.

The Fix: “I had a client who got herself in trouble with debt because she tried to keep up with friends. While she earned a modest income of $3000/month, her friends earned significantly more. They would book trips and fun events and she would feel obligated to join to not miss out on the fun. It finally reached the point where she needed to do a consumer proposal. In my counselling session with her, I explained too many people get caught up in the moment. When you have friends who see money as no object, you can end up spending above and beyond what you can actually afford. To combat this, be honest with your friends about your budget and offer alternatives for social outings. Instead of hitting up nice restaurants or weekends away, ask them to consider instead making dinner together at home one night or having a weekend slumber party. Your true friends will understand, and your honesty might even have them reflect on their own spending habits.

How to Start

This one is easy. Just start. The best way to start talking about your finances is to peel off that Band-Aid and do it. Whether you’re out for coffee with a friend, hanging out on the couch with your partner, or having your kids over for dinner―bring up the conversation by asking them questions like:

  • How do you feel about your money?
  • How do you manage your money?
  • What financial worries or stresses do you have?
  • What are some of your big financial goals?
  • What do you think you/we could be doing more or less of to achieve those goals?

Chances are they’ll be taken aback at first, because money isn’t commonly talked about. But that initial shock often gets quickly replaced with relief because they’ve also been wanting to talk about their finances with someone.

Talking about money won’t be easy initially, but we promise it’ll get easier the more you do it! And if you would like to talk about your finances with a professional, our counsellors and money coaches are available throughout Alberta to help you figure out a Money Action Plan, pay off your debts, plan for retirement and taste that financial freedom. Contact us today to learn more!

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