It’s taboo. It’s not polite. It’s personal. These are all things you’ve probably heard when it comes to talking about money. Keeping your lips sealed about your personal finances is pretty common, but your financial future may be in jeopardy if you’re not willing to talk openly about financial planning.
Unsurprisingly, only 9 percent of baby boomers frequently discuss money matters with the people closest to them, according to TransAmerica. And, a survey by Wells Fargo found that 44 percent of Americans see personal finance as the most challenging topic to discuss with others, more so than subjects like death, politics, and religion.
However, avoiding a straight talk about your financial situation could be hurting your prospects for a secure and happy future.
Here are 10 reasons why talking opening about money is useful and tips for getting conversations started:
1. Straight Talk with Friends and Family Boosts Your Success (and Theirs)
Peer pressure does not end in middle school. We feel the pressure as parents, in the workplace and sometimes even about when we will retire or what to do in retirement.
However, peer pressure is not always bad. Peer pressure can also encourage us to adopt better habits and make better decisions.
- Studies have shown that people who have friends with high financial intelligence become more financially intelligent themselves.
- And, just as you are more likely to exercise if your peer group exercises, you are more likely to save for a secure retirement if your friends are saving as well.
Personal finance is a big deal. By talking about it with friends and family, you are helping yourself and your loved ones by bringing the topic to the forefront. Financial and retirement planning is too often done in secret or not done at all. However, having straight talks about it can help make the issue more prominent.
Talking about retirement can enable us to find new ideas for achieving financial success and ultimately be more prepared.
2. You’ll Avoid and Solve Problems
The Common Cents Lab told Scientific American, “In our interviews, we frequently encounter individuals that accumulate crippling debt, miss opportunities to save, or are unaware of basic financial strategies that would improve their well-being—often because they were embarrassed to ask their friends and family for advice about money.”
Talking to people about your financial situation can help solve your financial problems.
3. Conversations About Money Can Reduce Stress
Think about what you do when you have a difficult problem to solve. Odds are that you turn to colleagues, friends, or family to talk. These conversions can elicit empathy, understanding, a good solution, and almost always a more optimistic outlook.
Conversations about money can do the same. You will likely find that you aren’t alone in your worries and you may find ideas to help solve your problems.
4. Talking About Money Results in Valuable Insights and Advice
When it comes to other areas of your life – work, relationships and lifestyle choices – your friends and family members might be the first people you turn to for advice and comfort. Why should financial advice be so different? If you’re not reaching out to the people you know about retirement finances, you’re likely missing out on some important advice.
The people you know may or may not have all the answers, but just talking about things can sometimes bring clarity and a fresh perspective to your plans.
5. You Are More Likely to Follow Through on Your Plans
When you tell friends and family about your financial goals, you are increasing the odds that you will be successful. You are adding a layer of accountability to your plans.
A study showed a remarkable 3.7-fold increase in the number of deposits made by people who had the option to publicly announce their savings goal, which was then monitored in weekly meetings.
When you commit to a goal and feel accountable to someone, it’s easier to follow through.
6. Getting on the Same Page As Your Spouse is a Good Idea
Money is the number one cause of divorce. Maybe it is because spouses aren’t talking with each other. A survey by Fidelity Investments found that only 38% of couples discuss financial strategies for retirement.
Enlisting a spouse or partner in financial decisions can be a key financial health strategy. Research has found that joint decision-makers are less susceptible to behavioral biases, resulting in better outcomes.
Explore 8 financial conversations to have with your spouse.
7. Talking About Money with Colleagues Can Help You Increase Your Income
It may be uncomfortable and an office taboo, but having candid discussions with colleagues can help you increase your income. It is important for you to understand your salary relative to others in your field. And, talking about money and income, even if you avoid the nitty gritty numbers, can help you make a strong case for higher pay or to seek out a different job.
8. Discussing Finances with Your Children Can Help Them Do Better
Our attitudes toward money develop over our lifetime and are informed first and foremost by the examples of parents. Talking opening with your children about your financial strengths and weaknesses can set them up to do better in the future.
Researchers have found that people from households that spoke openly about finances were less likely to have problems with impulse spending and had significantly less credit card debt.
9. And, Talking to Children About Your Estate (or Lack of) is Important
While opinions vary, most financial experts recommend that parents be open with their adult children about expectations for inheritance. It is also important to be honest if you expect that you will require financial assistance as you age.
Learn more about passing on financial values and get tips for discussing money with family.
10. You May Be Surprised What You Learn By Talking to Your Aging Parents
It is important to understand the financial situation of your parents, especially if you would consider helping them in some way. And, the sooner you can have the conversation, the more options you can explore for providing assistance.
According to Pew Research, about a quarter of all adults aged 45 to 64 cares for an aging adult. Of the people providing assistance, about 58% provide help with errands, 28% help financially, and 14% provide personal care.
Straight Talk About Retirement Does Not Need to Be Embarrassing
As teenagers, we might have been embarrassed to talk about personal matter, but we did talk and learned that everyone else had similar problems.
In our middle ages, we might have been embarrassed to discuss problems like not advancing at work or issues with our children. But if you did talk, you found that everyone else experienced the same types of dilemmas.
As we approach retirement, we may be worried that we are the only ones who did not save enough or know how to create retirement income or when to start Social Security. However, it is unlikely that you are alone.
Study after study shows that only a handful of people are actually prepared to retire. The rest of us are trying to figure it out. And we can help each other find the right answers.
How to Get the Conversations Started
Ask questions
The secret to being a good conversationalist? Asking questions and listening to the answers.
You don’t have to share much about your financial situation to have good financial conversations. Try one of these ice breakers:
- What’s the worst financial mistake you have ever made?
- What did you learn from your parents about money?
- Do you have financial goals?
- Where do you get help with financial decisions?
Understand why you don’t want to talk about money
Maybe you are embarrassed that you have too much or too little money. Perhaps you are afraid of sounding dumb. Once you understand why you are avoiding conversations about personal finance, you can tackle what is holding you back.
Join the NewRetirement Facebook group
The NewRetirement Facebook group is a moderated space where people discuss financial questions. It is a supportive place to get answers, learn, and practice talking about money.
Build and maintain your own financial plan
You might feel more comfortable talking about money if you really have your hands around your personal financial situation. The NewRetirement Planner can help you assess your own situation and give you a really thorough understanding of all the components of retirement and financial planning. Retirement planning is much more than investing.
Take a financial planning class
Want the ultimate confidence boost? Take a retirement planning class! NewRetirement offers two different courses: the 8 week Intro to Planning class and a Dive Deeper course featuring 16 different topics. The classes are led on zoom (or you can always watch recordings). And, there are live Q&A sessions so you can learn from your peers.
Try starting a retirement club
You probably aren’t alone in your desire to start financial conversations. Why not try starting a retirement or financial planning club? It’s like a book club, but focused on personal finance.
Get retirement club tips here.
