Day 9 – Discuss Personal Finance With A Friend

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For today’s 31 Days To Your Financial Future task, I’m going to ask you to do something that might be difficult.

I want you to sit down with a friend or family member and have a discussion about personal finance.

I know. That’s tough. Money is often a private or taboo issue in our society, but I’ll tell you something — it shouldn’t be.

A 2013 poll by the National Foundation for Credit Counseling found that 68% of engaged couples held a negative view of discussing money with their fiancé. Can you believe that? It’s shocking enough to me that I need to repeat it: More than 2/3rd of young couples are uncomfortable talking about money with the one single person in the world who is going to be most intimately involved in their finances.

Three-quarters of us think money is something that shouldn’t be discussed with friends, yet 90% of young people would lend money to a friend or family member in need. Why is that? The bank won’t lend you money without asking about your financial situation; why would you lend to a friend without asking the details of theirs?

Only 22% of high school students report that they talk to their parents about money management frequently — but 87% say their parents are their primary source of personal finance information.

Why are we so hesitant to talk about money?

I think J.D. Roth of Get Rich Slowly says it as clearly as anyone can:

I believe that, ultimately, people don’t talk about money…out of fear of being judged.

This taboo against talking about money isn’t a good thing, in my opinion. It isolates us from others who can share and sympathize with our experience. It isolates us from potential mentors; it prevents us from mentoring others. It leads us to false ideas about how successful our friends are or how close our parents are to falling into a financial crisis. Not talking about money keeps us in the dark.

Today, I want you to take a step against that taboo. Sit down with someone — a friend, a family member, your spouse or partner — and have a discussion about money. Here’s how to keep it from being awkward.

Don’t Ask About Dollar Signs

Instead, ask “What do you want to do?”

Dollar signs are intimidating. They make us think “If my income is more than my friend’s, he’ll think I’m bragging” or “If my debt is bigger than hers, she’ll think I’m asking for money.” We don’t want to come across as critical of our friends’ financial choices, and we don’t want to come across as boasting about ours.

So take dollar signs off the table. Instead, open with a question asking about their future. What do they want to accomplish? What are their goals? When they tell you, follow up with a question more specifically about finance.

“I’d love to open my own stained glass business.”
“That’s really cool! What financial steps are you taking now to plan for that?”

“Dad, how old do you want to be when you retire?”
“Oh, somewhere around 65, I think.”
“Do you feel prepared for it?”

“Honey, how soon do you want to replace our car?”
“I don’t know. 3 or 4 years?”
“Instead of financing it, why don’t we start saving every week for it?”

Talking about money doesn't have to be hard.

Talking about money doesn’t have to be hard.

Initiate The Conversation

A good way to start a financial conversation is to open with something about your own situation. Tell your friend about something new you’re trying, or ask their advice on something. Say, “Hey, can I ask your opinion? I want to increase my retirement contribution, but we also have so much debt. What would you do?”

Talking openly about your finances shows your friend that you trust them, and in turn, gives them the cue that they can trust you.

When your friend does open up to you about their finances, listen.

Don’t interrupt. If you disagree with one of their choices, don’t criticize. Don’t lecture. You don’t even really have to offer any commentary at all, unless they ask for some feedback. Instead, just focus on making the conversation a comfortable one for both of you.

Try to learn from each other. Work together. Ask questions. If you’re both up for it, challenge each other to develop a good financial habit, then follow-up later to keep each other accountable.

This Shouldn’t Be A Complaint Fest

Despite our general societal reluctance to talk about money, some people don’t seem to have much trouble talking about it at all. I’m talking about the kinds of people who love to complain about their situation. They want to tell you how much it sucks being broke all the time, or how they don’t make enough money, or how they’re up to their eyeballs in debt.

I don’t particularly have an issue with complaining about your finances. It can be a decent way to get out some frustration, and everyone needs to vent to a nonjudging friend now and then. On the other hand, complaining shouldn’t be allowed to dominate the conversation, and complaint needs to be followed by action so you can get to a point where you have less to complain about.

Sometimes you need to ask them a very blunt question: “Do you actually want help?” If they say yes, offer to direct them to some helpful resources, like that great personal finance book you read or a personal finance blogger you really enjoy.

The Closer They Are, The More You Should Talk About

You don’t have to share every intimate detail of your finances with your friends. Your cousins who live two states away don’t necessarily need to know much about your money. But the closer someone is to you, the harder you should work to become comfortable talking about money with them.

If your sister may one day have to help you make financial decisions for your aging parents, you need to become comfortable talking about those kinds of things before it becomes a pressing issue. If your brother-in-law wants to open a business with you, you need to be comfortable talking not only about the business’s finances, but the finances of your own individual families.

Your spouse (or potential spouse) is the most important one. Unlike most other people, this person is going to be making financial decisions that directly affect yours. You have to find a way to feel comfortable talking to your spouse about money — there’s simply no alternative. It is absolutely vital that you be on the same page. According to Kansas State University, arguing about money, especially early on in the relationship, is the top predictor of divorce.

That doesn’t mean that a financial disagreement means your marriage is doomed to failure. But how you deal with those disagreements, how you communicate your financial values, and how you compromise and work together all determine whether or not your relationship is likely to last.

If you’re dating someone and thinking about marriage, talk about money first. Find out how much debt they owe. Find out about their spending habits and their ambitions. Do it before you sign that marriage license. See how that conversation goes, and if it’s a struggle, you know you’ve got some things to work on. Again, that’s not a coffin nail, but you need to know what you’re getting into.

Tomorrow: Minimize, Organize, and Focus Your Life

One of the keys to financial success is learning to be happy with less. Tomorrow, we’re going to talk a little about the value of leading a simple life and how to stop letting the pursuit of stuff rule your decisions.

Are you comfortable talking with friends about money?

How often do you discuss finance with others? Have you ever had a bad experience trying to talk with someone about money? Tell us about it in the comments!

Photo by Colin Mutchler.

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Posted in 31 Days To Your Financial Future
2 comments on “Day 9 – Discuss Personal Finance With A Friend
  1. Dear Debt says:

    I talk about money too much with my parents and partner! :) I also believe money and debt shouldn’t be kept under the rug and so many of our problems arise because we have no one to turn to to talk about it. This is a great set of steps to start a conversation — I think it’s important to focus on goals, not blame and keep the conversation positive and rooted in future dreams.

    • Adam Kamerer says:

      Good for you! Your comment about focusing on goals is so important. You can’t go back and fix past financial mistakes, in most cases. You can only move forward.

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