“Money makes the world go round”
Money defines a huge part of our lives. Our lifestyles, stress, what we can afford and how free we are with our decisions depend a lot on that magical number on our bank account.
Yet, it is still one of the biggest taboo topics between people and relationships. According to research by Old Mutual Wealth, 52% of UK adults barely talk about money, savings or debt with friends and family and this is not a UK problem it is a global problem. While money is the leading cause of stress in relationships, 40% of couples do not discuss how they will handle money before they get married.
If money is so important, why are we not able to talk about it?
Why we do not talk about money
“There are few things that can cause joy, shame, contentment, anxiety and stress the way that money does,” said Korrena Bailie, a financial journalist and senior editor of personal finance at Wirecutter.
Money can easily lead to an uncomfortable conversation. In order to debunk our misconceptions and discomfort, let’s look at the reasons why money can make us feel anxious.
Self-Deception
One of the key reasons we do not talk about our finances is because we ourselves do not know much about them. We might have a blurry number when it comes to our savings and no plans beyond golf for retirement. It is understandable that we do not want to talk about something we do not have clarity about.
Judgment
Talking about money can easily become a wild comparison. If you have more you make others feel bad, but if you have less you can be looked down upon. We fear being judged, or even being treated by others based on our finances.
Tradition
Tradition bars us from discussing several topics: politics, religion, intimacy, and finances. While in the last decade conversations on many of these topics have started to open up, personal finance remains in the background. It is not considered polite to ask about salaries, debts or how much we save.
Perception
Unfortunately, the perception around money is quite distorted. Money is often projected as a dirty element people would do anything for, and people who are full of it are snobs. We have money unconscious biases we tie to money and we do not want to seem greedy or eager to have it. This could not be more wrong — money is nothing more or less than an enabler.
Why we should talk about money
According to Meghaan Lurtz, a financial psychology consultant and researcher studying personal finance talking about money has helped several people improve their financial reality.
Help you get better with money
Maybe your parents are full of tips on how to save on daily expenses.
Maybe your friend knows a great way to earn extra income.
Your partner may have a better investment fund than you do.
As Meghaan Lurtz said “People may be somewhat nervous to talk about it if they make a lot of money, but they’re blowing half of it or not using their 401(k) or don’t know what an IRA is. So maybe they don’t discuss [money] because they don’t know any more than you do.”
Lurtz adds that there is no reason why you can’t attend finance classes or workshops with your friends the same way you do, say, fitness classes.
Talking about money can help you get clarity on your finances and discover countless opportunities to improve. People have different experiences, knowledge, and many of them go through the same challenges as you are going through.
Keep your arguments away
As our relationships advance, especially with our partners, money questions become more and more important. After all, it is your joint financial situation which decides whether you will have a better credit score, can afford that dream vacation or what kind of home you are going to make. Having clarity about your own and your combined financial situation can help you prevent future arguments. You will be both clear on the other’s priorities, spending patterns and future plans and will be able to align it before you need to make a decision.
There is another proven argument for financial openness: joint financial decisions can make us more risk-averse and less prone to errors. This was demonstrated by Ian Bateman and Alistair Munroe’s study at the University of East Anglia, which compared the risk profile of financial decisions made by individuals versus couples. They found that joint decision-making results in fewer financial risks.
Find support to reach your financial goals
Opening up a conversation about your financials can help you find the support you need to reach your goals, and realize you are not alone. Recently both online and offline communities have started to form around better money management. Online forums like Ladies Get Paid, Mr. Money Mustache, Rockstar Finance, Reddit Personal Finance or Bogleheads can be a great place to start.
These supportive communities can give you a safe environment to talk about your financials, with people who are equally motivated and reach collective wisdom. Personal finance gets much better once you realize you do not have to do it alone.
Did we manage to change your mind? Are you ready to talk about money?Then stay tuned for Fairlo, as next week we are going to dive into how to open up conversations about money.
