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June 2013

Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series. This month the participants are discussing retirement.

Calvin is in his early 40s, earning a salary of $120,000 plus bonus as an IT project manager in New Jersey. He has recently finalized a divorce and has a teenage child. Read his bio here. Calvin is on Team Sara, with Certified Financial Planner Sara Stanich.

The net worth report below and following commentary refer to the last full month, May 2013. Last month’s report analyzed Calvin’s progress during the month of April. Continue reading this article to see the net worth report and Calvin’s own analysis, which are followed by Sara’s feedback.

Sara Stanich, CFP appears courtesy of Stanich Group and Cultivating Wealth.

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Talking openly and honestly about money, whether with friends or family, has its benefits. Starting a conversation can be difficult, particularly if one party to the discussion is at a different place financially than the other party. Sometimes, it’s even a better choice not to discuss money if doing so might stand in the way of cherished personal relationships, particularly if it’s not a relationship where money is a critical factor.

Before you open your mouth, consider a couple of questions first.

Why do you want to talk about money? As I wrote earlier this week, there are many great reasons for opening an honest discussion about money. If you’re planning to share your life with someone, you must have this discussion at some point. Potential roommates, even those not romantically involved, need to be aware of each other’s household responsibilities and how each other treats those responsibilities. Parents need to be honest about living in a world with financial realities so their children can have a chance to be financially capable on their own.

There are some situations where money discussions are less necessary. Here’s an example. Typically, you and your long-time friends gather for dinner at a restaurant once a month. As per tradition, you split the check; none of you are financially independent (yet) and are most comfortable with this payment arrangement, rather than rotating the check to a different participant each meeting, for example.

One particular friend in this hypothetical situation always comes up short or refuses to contribute in a manner congruent with the behavior of the rest of the group. When is the appropriate time to approach this particular friend about his behavior that doesn’t fit in with the group’s norm? Is it ever appropriate? Is one individual “allowed” in this particular social setting to play and pay by his or her own rules?

There are three socially appropriate options here. Either ask this friend to adjust the behavior, accept that the behavior won’t be adjusted and work around the attitude, or stop inviting the friend to dine at these gatherings. The second and third options may not be ideal, and although they appear to avoid confrontation, they might escalate emotions or create more problems in the future. At the same time, the first option isn’t too appealing.

Is talking about money more about selfish needs? Successful people often forget that those who are less successful don’t always see unsolicited advice as a blessing. Many people have an desire to help, whether the desire seems innate or whether it’s encouraged by the environment in which someone lives. Helping others is seen as a good deed in many cultures, but there are some situations where the desire to help results in damaged feelings and relationships.

On the receiving end, unsolicited advice is bothersome. At every step in my life, friends and strangers alike have wanted to share with me their opinions about my choices — whether those choices pertain to my money, my career, my business strategies, my personal relations, and so forth. Perhaps I give off an aura begging for people to tell me what I should do. But in reality, I’ve been self-aware, and I’ve purposefully sought out people to talk to about various issues. At the same time, I have trust in myself to make good decisions and seek help when it would be to my advantage.

For this same reason, I don’t tell people what to do with their money, at least not without being asked for my opinion. I may write about money every day or so here at Consumerism Commentary, but I don’t evaluate my friends’ financial situations and don’t help them solve their problems unless they ask — and they don’t.

This need to help that inspires people to begin doling out advice often comes from selfish interests, not selflessness. At the same time, not everyone who needs to talk about money will be strong enough to ask for that advice.

When is the appropriate time to bring up the subject of money? The appropriate time depends on the situation. For example, dealing with a roommate, even with a friend, is a business relationship. The appropriate time to talk about some of the financial issues surrounding cohabitation is before anyone signs the lease. Viewed purely as a business discussion, it’s easy to bring up the topic.

Dealing with your friends outside of a business-like relationship is much more difficult. In the earlier example about dining out, you have to be somewhat sensitive to emotions. Taking someone aside to talk about incompatible behavior could be interpreted as an insult or an attack on his or her philosophy.

For new couples, money may not be an appropriate topic until the relationship seems to both people like it might have a future. By that time, each might have an idea about the other’s approach to financial issues, but there may be monsters lurking underneath. With family, if the financial situation is dire, like an adult child who cannot seem to figure out how to live on his or her own, a frank discussion is necessary as soon as possible, but it can be framed as an opening for them to ask for help, without embarrassment or an admission of defeat, with life beyond parental monetary assistance.

Those “interventions” often depicted on television, where the entire family sits down to confront a problem as a surprise, are almost never good ideas.

Tips for starting that conversation about money

Know the person. In what situations would they most likely be open to a non-confrontational talk about money? If you can’t answer this question, you may not be the best person to bring up the topic. Sometimes it helps to appeal to someone who has a closer relationship, someone who he or she respects and views as a role model, and work with that individual.

Check your own ego. Don’t approach the topic as if you have all the answers to life’s most tantalizing questions. Don’t give into your desire to be a hero or savior. Assume that you are not aware of the entire situation, assume that there is some logical reason for whatever financial behavior you feel needs addressing.

Appeal to his or her ego. Start off with a positive observation, then ask questions, particularly about his or her successes and thinking processes. It might help you better understand the philosophy behind financial choices, as well as allow them to open up to you. Follow the “PSP” framework: praise, suggestion, praise. I’ve also hear that framework called a “compliment sandwich.” Always look for something positive discuss. Even though this is a popular technique that doesn’t fully disguise intent, the praises still make it effective.

If you are a couple, talk about your shared goals. This may not be appropriate in all situations, but it can be helpful to frame discussions about money into much larger concepts, like life together in the present and in the future. Within a close, loving relationship, you might be able to delve deeper into past issues that may have framed today’s approach towards money. Remind him or her often that this is a team.

Be non-judgmental. One of the reasons people don’t talk about money is that they don’t want to be judged, particularly by people they like and respect. This makes starting a conversation more difficult. Subtly assure someone you’re speaking with that financial behavior has no bearing on what you think of him or her.

What tips do you have? How do you start a conversation about money with someone who needs help with something pertaining to money, and may need to be told that they need help? How did you begin your first conversation about money with your spouse? How did you help a son or daughter become financially responsible on his or her own?

Photo: Flickr


Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. This month, the participants and experts are discussing, among other things, retirement. Read this introduction to learn more about the series.

Kathleen is thirty-one years old, single, and living in Portland, Oregon. She loves her job, even if it isn’t very lucrative. With her $33,000 income last year, she’s looking to make more money from “side hustles” this year, such as her blog, Frugal Portland. To learn more about Kathleen, read her bio here. Kathleen is on Team Sara, with Certified Financial Planner Sara Stanich.

Kathleen’s report this month, below, includes Kathleen’s progress over the three months leading up to the end of May 2013. Following Kathleen’s own self-analysis, Sara Stanich will offer thoughts from her perspective.

Sara Stanich, CFP appears courtesy of Stanich Group and Cultivating Wealth.

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Naked With Cash is the year-long series on Consumerism Commentary where seven readers’ households share their financial progress on a monthly basis. I’ve partnered with financial planners who will offer some guidance along the way. Read this introduction to learn more about the series. This month, the participants and experts will be discussing retirement as part of their analyses.

SteveDH is retired, and he and his wife have two grown kids. By the time he retired in 2008, he had reached his retirement asset goal of $500,000. His goal now is to ensure his savings last as long as he does. Read his bio to learn more about SteveDH. SteveDH is on Team Roger, with Certified Financial Planner Roger Wohlner.

This is Retirement Month at Naked With Cash, so each participant has been encouraged to share details about their coverage, and the experts will provide their perspectives on the topic.

Keep reading to see his net worth report, updated for May 2013. To catch up with SteveDH’s progress, you can also read last month’s report or other prior reports from the Naked With Cash home page. Following the current month’s analysis from SteveDH, Roger Wohlner will offer his own thoughts and guidance from his planning perspective.

Roger Wohlner, CFP appears courtesy of The Chicago Financial Planner.

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