Five ways to make difficult conversations about money easier
Money conversations are some of the most difficult. But with research indicating financial conflicts are the largest predictor of divorce, there鈥檚 little doubt that money talks must be had.
Close to half of all Americans (44%) say money is the most difficult thing to talk about鈥攎ore difficult even than death (38%), politics (35%) or religion (32%), according to a survey from聽.
You make plans to have dinner with friends, but the restaurant they suggest is out of your price range. Your extended family plans a reunion getaway, but a vacation isn鈥檛 in your聽. You hire a family friend to care for your child, but will soon have to consider a cheaper option.
These situations create tension that could largely be resolved with a conversation. Instead, many zip their lips and plow ahead without having the necessary talks.
A 鈥榝inancial makeover鈥� spurs tricky conversations
For Sarah and James, a couple living in New York and taking dramatic steps to get their finances in line, conversations like this have become a new way of life. The couple were winners of a 鈥淔inancial Makeover鈥� contest from NerdWallet and the National Association of Personal Financial Advisors (NAPFA). They were on the brink of financial disaster when financial advisor聽聽stepped in to help them make some important decisions about money.
Among those decisions: cutting spending that wasn鈥檛 absolutely necessary and being transparent about it with the people around them.
鈥淲e started with a family who we鈥檙e very close to who helps care for our son,鈥� said Sarah of their new venture into financial transparency. The couple was paying more than $1,000 each month for聽聽and came to the conclusion that this expense wouldn鈥檛 be necessary for much longer.
鈥淲e were very open with them that when our son turns 4, we鈥檙e going to enroll him in the public preschool鈥� rather than the family鈥檚 private preschool program, Sarah said.
In business and pleasure, transparency is best
These difficult conversations are made even harder, Tilp says, when personal and business relationships are combined.
鈥淭o start, an 鈥榦unce of prevention鈥� is much better,鈥� says Tilp. 鈥淭hat is, if someone is considering getting into such a relationship, there needs to be a conversation beforehand about 鈥榳hat if.鈥欌��
As changes arise, the people involved need to feel free to share openly and without fear of judgment.
Regarding the childcare arrangement, 鈥渢he longer heads-up I can give them, the better it is for them,鈥� says Sarah, who knew the family would need to plan for the loss of income.
But not all personal finance conversations have a business angle. If your friend wants to exchange holiday gifts, or suggests meeting at a high-end restaurant, honesty and transparency are still the best policy.
鈥淎s in the case of Sarah and James, there are hard choices that sometimes need to be made,鈥� says Tilp. Talking about these choices and maintaining boundaries when your finances demand it requires courage.
Start from common ground
Everyone has money problems. Even people with plenty of money experience financial conflict. A study last year from聽聽revealed that money arguments had potentially disastrous effects on marriages regardless of net worth, income or debt.
鈥淚t鈥檚 important to understand the other person in the conversation likely has money issues too, despite outside appearances,鈥� says Tilp. 鈥淓very client I work with has a unique situation, but there are around financial security and priorities.鈥�
鈥淓ntering a conversation knowing the other person is not perfect in their own financial life is a good place to start.鈥�
Suggest alternatives
If it鈥檚 an outing that鈥檚 just out of your league, suggest alternatives. Maybe you can cook with friends rather than eating out, or have the family reunion at someone鈥檚 home. Perhaps you should simply and politely decline the invitation, or reschedule for a later date when money won鈥檛 be so tight.
If it鈥檚 a situation like Sarah and James鈥�, where someone like a childcare provider may suffer a loss due to your budgeting, helping them find a new willing partner could soften the blow鈥攕preading the word to other parents who might be looking for care, for instance, or posting flyers at your church or library.
Calm your fears
Broaching the topic of money with friends and family can feel overwhelming; you may feel embarrassed or worried they won鈥檛 understand. But one study in the聽聽indicates your nervousness is for naught.
Researchers found that although participants feared negative consequences when having difficult conversations, most reported positive results. So breathe easy.
When it comes down to it, the people in your life aren鈥檛 likely to abandon you for your money decisions, particularly when you are acting with your financial health in mind.
鈥淚f you鈥檙e divulging your financial struggles to people that you love, it doesn鈥檛 have to be a scary situation,鈥� says Sarah, reflecting on her own money conversations. 鈥淕enerally, if they care about you, they鈥檒l be willing to get behind you.鈥�
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