Whether talking about money is too personal or taboo, keeping quiet about your finances is common. Talking about money can bring out insecurities or other emotions that can get complicated and messy. Yet how you deal with money affects how you live and prepare for the future. Find out five reasons you should talk about money to take control of your finances.
Why is it difficult for people to talk about money?
People hate talking about money and most of the time never do. Whether you like it or not, money is usually a significant factor in everyday decisions and relationships. You can miss out on great opportunities for conversations that might arise simply by being anxious about discussing finances. Talking about money might be considered bad manners by some folks, but there are benefits to having more open and honest conversations about your financial well-being.
5 benefits of money conversations
Here’s how talking about money can be good for your financial and mental health:
Discussing expenses can help you establish a budget
It helps to have a baseline understanding of what others spend on similar items. Having a community of like-minded people with whom you can speak freely about expenses can be very useful. Ask friends or neighbors what you can expect to spend on rent, groceries, or utilities to help set expectations for yourself. If someone feels uncomfortable giving you the exact amount they spend, they can also speak of past experiences or share general information.
A budget helps you understand your spending. Ask family members or friends whether they use an online budgeting system or an app to track their financial activity. Some apps pull in your bank account activity, update your budget, and reveal your net worth.
You gain control over your finances when you decide where to spend your money. Every dollar you make is assigned a job. Key benefits to having a budget include:
- Control: All budget decisions are yours.
- Monitor: Using budget categories, you can easily monitor how much of your money goes where. You can determine your net income by comparing what you made versus what you spent for the month.
- Identify problems: If your credit card bill is higher than you’d like, you may need to curb your spending.
Not only does a budget help you develop healthy spending habits, but you can also incorporate future money goals. Consider these budget tips:
- Build an emergency fund: An unexpected car repair or medical bill can wipe out your budget. Protect yourself against the unexpected and set aside money each month for an emergency fund.
- Find an accountability partner: Are you having a tough time staying on track? Consider asking a family member or friend to be your accountability partner. Knowing someone else is reviewing your finances can help you stick to your budget.
- Participatory budget: Talk to a trusted friend or family member if you need help preparing a budget. A participatory budget approach can give you greater insight into your spending and financial goals.
- Pay down debt: If you have racked up high balances on your credit cards, incorporate a monthly debt repayment strategy into your budget.
- Stick with cash: Paying with credit may lead you to spend more than you should. Stick with cash to avoid overspending.
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Engaging in conversations about careers and salaries could increase your income
If you want to help move up in your career, you should build connections with colleagues and co-workers. A money conversation can sometimes lead to you asking for a higher salary. Many forums exist for this purpose, including professional associations and social clubs. This will help give you a salary range to look for when job hunting.
Rather than asking someone their exact salary, you can ask how they feel about their current salary. Ask questions about what an entry-level person may make compared to a senior-level position within a specific area of expertise.
This information should give you an overall range that you can use to compare to your background. If you don’t feel comfortable having these conversations, use a website like Glassdoor to compare salaries across all industries.
Being open about money helps you teach your children about finances
One of the most effective ways for parents to teach their kids about finances is by being open about money.
While money talks may be an age-old practice, conversations today may need to be more informal, and personalized for some kids. Children may hear (and see) money talk from their peers, teachers, and media, and they may be curious about how their parents handled money growing up. So, when you have money talks, be kind, light, and informative.
Having a family budget is helpful, but make it simple. If your teen has a job, you may want to discuss how much he or she has earned that week. If your teen wants to buy a car, discussing the list price, monthly payment, and insurance ahead of time could be beneficial. Consider discussing how practicing good driving habits could help save on car insurance costs.
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Here are a few additional ways to help your kids understand the value of money:
- Implement chores in exchange for an allowance so your kids learn the value of money. Explaining how you work hard to put food on the table is important.
- Have your child choose a special toy they want and help them save all or half the purchase price. You cover the rest.
- Use cash when shopping with children to help them better understand the exchange of money for a product and sneak in a math lesson, too.
- Buy on sale. Teach children about value and saving money by teaching them to look for sales. Explain that buying things on sale allows them to save as well.
- Start a piggy bank to teach your child how to save money. Help them develop financial habits by encouraging them to set aside some of their chore money. Take this lesson further and deposit the money into a high-yield savings account. It could help children develop good savings habits and see how the power of compound interest grows their money over time.
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Learn savvy finance tips when you share yours with others
There’s no better feeling than knowing you got a good deal for something or bragging about that good deal to your friends. Learn from other people’s money-saving advice and share your own best tips. Don’t be afraid to share best practices with your circle, such as purchasing in bulk, shopping private labels, or finding the best coupons. You can learn a lot of great financial tips from people by asking them what they do and how they do it.
Money discussions encourage smarter financial choices
You can learn valuable money lessons from people who struggle financially. Ask questions about how they overcame such financial difficulties as overspending or taking on too much debt. You can better understand the importance of good credit when you chat with someone with a less-than-stellar credit report. If they were saddled with credit card debt, you might discuss what repayment options were available. Ask what they would do differently to maintain a good credit score.
Money talks can help make you a savvier consumer, so you can realize more value for your money. Whether you are planning to buy a home or looking to invest your money, ask your inner circle for recommendations. If you want a greater variety of opinions, read online reviews and join online communities. Reddit and BiggerPockets are great places to start.
Stay in control and talk money
Talking about money can be uncomfortable and some people avoid this at all costs. But when you let go of the fear, a good money conversation can put you in a position to help improve your financial future. Not only can you share your knowledge and learn from others, but showing your vulnerability could help deepen your relationships.
Isn’t talking about money considered rude or taboo?
Talking about money can be considered rude or taboo in certain situations. Traditionally, discussing personal finances has been seen as a private matter that should not be openly discussed. However, if you can push past this discomfort, talking about money can help improve your financial outlook. The valuable insights from your money talk may improve your saving and spending habits.
How can I initiate a conversation about money without causing discomfort?
A money conversation doesn’t have to be about how much you make or what’s in your bank account. To lessen discomfort when talking about money, choose financial topics that may be less direct but are easily relatable. You might discuss finding an affordable apartment or saving money to buy something outside your budget.
What should I do if someone refuses to talk about money?
If someone refuses to talk about money, it is important to respect their boundaries and not push the issue. Not everyone will feel comfortable talking about money. You can try to find alternative ways to discuss the topic indirectly or just ask someone else.