How to Talk About Money with Your Loved Ones
5 Tips From a Communication Expert to Improve Your Money Conversations
Most individuals and families have no idea how to talk about money skillfully. A recent report from Cerulli Associates confirms this (Via FA-Mag):
While the majority of asset holders (79%) plan to share their wishes and intentions with family before dying, only 46% actually do.
What is the gap between the desire to communicate with money and failing to do so? Why does this exist?
As Scott Smith, Cerulli’s research director, notes in the article:
“What’s lost are the conversations that can keep family members on the same page about what will happen with an inheritance and why.”
We Are Not Financially Well
Our inability to communicate about money doesn’t start and stop with estate planning and inheritances.
In my book, Money With Purpose, I argued that we are not financially well.
Here are a few statistics:
72% of adults report feeling stressed about money (American Psychological Association)
Couples who disagree over money or financial issues once per week are 30% more likely to get a divorce than couples who disagree only a few times per month (NYT)
Money leads to marital disagreements that run deeper and remain unresolved for longer (NYT).
Only 40% of pre-retirees believe their retirement savings are on track (Federal Reserve Board of Governors)
We hold all of this inside of us.
Our Secret Shame
In 2016, Neals Gabler, a well-known biographer and novelist, wrote an article entitled "The Secret Shame of Middle Class Americans." In the piece, Gabler spoke to the heart of American financial struggles, perfectly encapsulating the impossible daily dilemmas many families choose between.
He discussed these issues so poignantly because he's been living them himself.
Gabler's article moved beyond statistics and anecdotes to a conversation regarding the incredible emotion that permeates our financial reality. Specifically, he highlights our "secret shame" - our feelings of inadequacy around money - and what a perfect phrase that is for the way we feel about our financial shortcomings.
We live in a culture where we cannot acknowledge, let alone discuss with any honesty or candor, our emotionally charged relationships with money.
As I argued in my book, the shift toward financial wellness is internal just as much as it is about dollars and cents. In fact, managing the latter is simply a matter of learning technical knowledge that is widely available in books, courses, and other sources. The hardest part of ‘personal finance’ is the personal part.
Learn to Communicate About Money
We have no idea how to communicate about money--not with ourselves and certainly not with others. Worse, the higher the stakes, the worse we do. (Have you ever listened to Congress debate emotionally charged topics like federal debt? Wowza!)
Though estate planning (or generational planning) is the process of organizing and dedicating our assets and affairs, the dollars and cents aren't the core of it.
Estate planning is about love and care. Love and care are personal.
Budgeting seems simple on a spreadsheet, but it can quickly rub against life's wants and desires. Problems compound when budgeting for two or more members of a family with varying preferences and behaviors.
Saving money for a goal, like a trip or your retirement, seems simple. But what if there are competing goals? Or what if spouses aren’t on the same page regarding the goals? Maybe a spouse is comfortable working until she is 70 if it allows her to spend more in the here and now. In contrast, her husband prefers to save more now so that they may retire earlier at age 65. What then?
Well, they’ll need to learn to communicate effectively about money. And my guess is you do too.
Use These Five Strategies to Improve Your Money Conversations Immediately
One of my favorite books is Non-Violent Communication: A Language of Life by Marshall B. Rosenberg. It’s a wonderfully written book that provides a practical guide for learning effective and respectful communication. Money is a realm where we could use a healthy dose of non-violent communication to help us when speaking with others and with our internal dialogue. Remember, it is just as important to non-violently communicate with yourself as it is with others. In fact, it may be more critical.
Using Dr. Rosenberg’s book as a guide, here are a few helpful tips to communicate respectfully, patiently, and clearly about money.
Listen and Speak Nonjudgmentally
Avoid Giving Opinions
Acknowledge and Express Your Needs
Don’t Let It Define You
Stop Diagnosing
Listen and Speak Nonjudgmentally
According to the tenets of non-violent communication, the judgment of others contributes to violence. When discussing money, we must recognize how emotionally charged this topic is for ourselves and our conversation partners. Any perceived judgment will likely lead to your conversation partner shutting down and turning off. If you feel judgment arises when discussing money, acknowledge it internally and then let it go.
Avoid Giving Opinions or Advice
Often, when we listen to another’s problems, our first impulse is to solve them. This does not necessarily come from a bad place; a desire to help is good. But it can bar us from empathy or from understanding feelings that may be brewing underneath the surface.
When a friend’s or loved one’s financial worries or experiences come up in conversation, it’s difficult not to insert your own biases as if they were foregone conclusions. Resist this urge!
Usually, when someone shares a financial issue with you, they are not looking for your opinions.
Rather, they are desiring a listener. Offer that space if you can. If not, pleasantly excuse yourself. However, it is usually better to ask the right question, allowing your conversation partner to come to their own conclusions in a healthy manner, than to offer, unsolicited, what you see as the correct answer or solution.
Clearly Acknowledge and Express Your Needs
The main roadblock to getting our needs met by others is that we do not effectively communicate our needs. Often, we are expressing judgments in place of our needs. Instead, we should be stating our needs, which means that we have spent time ensuring that we are clear on our own needs and making clear requests to another to help us meet those needs. Here’s an example:
As a family with limited resources, sticking to our pre-decided monthly budget is in our best interest. When you spend ‘x’ amount of money without communicating with me prior, it makes me feel unimportant, dismissed, and frustrated. It would be of service to me if we could reaffirm a budget and commit to communicating before large purchases. Are you willing to do that?
After calmly and clearly stating your needs, offer space for your conversation partner to respond in a similar fashion.
Don’t Let It Define You
We are targets of incessant chatter from the media and pop culture that tells us we are defined by what we have and how much we make. Don’t listen to it. Don’t even hear it.
Instead, sit in a quiet place, and think about what money means to you. Assess how you learned that. Parents? Spouse? Television show? Keep what serves you. Acknowledge what doesn’t, and leave it there. Repeat annually or even more as necessary.
Stop Diagnosing
Mr. Rosenberg teaches that “when people hear needs, it provokes compassion. When people hear diagnoses, it provokes defensiveness and attack.”
For example, when my wife and I discuss a money-related issue, I often attempt to ‘solve’ the situation. In my mind, I’ve figured out the underlying problem for both of us, and I am simply presenting what I see as the optimal solution.
“When people hear needs, it provokes compassion. When people hear diagnoses, it provokes defensiveness and attack.”
What happens? She shuts down. We get nowhere. Why? Because instead of listening to what she defines as her needs, I diagnose the situation as I see it. Her voice is lost. This is incongruent with healthy discussion, and ultimately, we end up right where we started… or worse, a few steps back.
Don’t diagnose the problem for another. Ask good questions. Give them the necessary space to express their needs. Then, receive the same and gently take the space your conversation partner offers to express your needs. Continue from there.
Try it Out
Try these five skills next time you need to discuss money with a friend, with your spouse, with a family member, or at the workplace.
After your conversation, note what went well and where you could improve. Try again!
Remember, you can’t control how others respond. You can only control how you show up in conversations.
Good luck!