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Four Reasons to Talk Honestly About Money

This article was written by in Personal Finance. 8 comments.

Prior to starting Consumerism Commentary, I didn’t talk about money. I’d encountered money problems with friends and families, and dealt with the problems as they came, but except for a conversation later on with my father once I was starting to improve my financial situation, it just wasn’t a topic for general discussion.

People don’t like talking about money. It’s seen as a private topic, and it can make people feel uncomfortable.

Because money is something easily measured, it draws comparisons. A few years ago, as more people began to post their net worth online, anonymously or otherwise, the process began to draw comparisons. Whose net worth increased the most this month? Which blogger is the latest to destroy his or her remaining debt? Among friends offline, comparisons like these can be hurtful, so people try to hide or mask their financial condition.

Even among friends, people also avoid money discussions because they’re concerned about their own lack of knowledge. Human nature prevents people from being the only person in a crowd not to understand something. Overall, money management has simple concepts, but how they play out can often be complicated. It’s better, when protecting one’s ego, to avoid discussions where one might not be the smartest guy in the room.

Despite the social stigma, in the right circumstances, talking frankly about finances has its benefits, whether it’s about a budget to be shared within a couple considering cohabitation, salary competition between similar employees, or tools and concepts for investing for the future.

1. Information is power.You are a better negotiator when you have more facts. That’s why many employers try to forbid workers from discussing compensation. If compensation were transparent, there’s a chance that an employee who accepted a salary offer below what the company would be willing to pay would demand a raise. It could create bad feelings in the workforce, and negativity gets in the way of efficiency and teamwork — two virtues important to an employer.

2. Honesty about money can spotlight compatibility problems. If you’re considering sharing a household with a partner, you’re merging the responsibilities from two people into one family of sorts — whether you’re married or not. If you do end up sharing bank accounts then you must be aware of your partner’s attitude towards money.

Different money philosophies don’t necessarily mean two people are incompatible. Savers can function well with spenders and vice versa if they don’t lie to each other and don’t hide anything substantial from each other. Money discussions for couples should be part of a larger ongoing conversation about goals, dreams, paths, and the choices they make together.

3. Discussion leads to new ideas. With more openness among friends, you could learn about opportunities, techniques, or options for improving your own financial condition. For example, if you’re looking for a new job, don’t stay silent. Your friends and colleagues can be good resources. They might be able to introduce you to someone who might be able to better suit your career desires.

By talking honestly about your investments, without trying to brag, you might find that there are opportunities to save money. If you explain your price-consciousness by describing a savings goal, you might learn of a method of increasing your savings at a faster pace.

4. Personal stories motivate. I can write about my former problems with debt in an effort to encourage others to not make the same mistakes. But if you don’t know me, the story would not have as much power as the story of a close friend. When you are willing to share your thoughts about money, other people will be encouraged to share theirs as well. If you are honest about your obstacles, you will find that those you talk to open up as well.

Hearing about personal struggles, whether wrestling with debt, dealing with a difficult employer, or handling unexpected expenses, has several benefits.

  • You can learn from others’ mistakes, and the mistakes of those closest to you emotionally are more relevant and more effective in changing behavior than those from a book or a blog.
  • You can provide emotional support for your friend or relative. By providing emotional support when it is needed, you become stronger yourself.
  • If you are doomed to repeat your friend’s mistakes, at least you know that your friend is likely to reciprocate the support you provided in the midst of their difficult situation.

You can use others’ experiences as motivation to help you make the best choices and move forward towards your goals. It’s not just negative experiences that provide motivation. Positive stories do as well. Hearing about how your friend navigated a difficult real estate market, how your cousin quit his job to follow his dream of being a successful professional musician, or how a colleague left his employer to form his own business can give you the push you need to take action.

Has there ever been a situation where talking about money enabled you to improve your own financial situation? Are there any situations in which it would be a bad idea to discuss your finances?

An upcoming article will discuss tips for starting a conversation about money. What are your suggestions for introducing the topic among friends and family without being offensive?

Photo: Flickr

Published or updated June 24, 2013.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 8 comments… read them below or add one }

avatar 1 Anonymous

I was talking about how much we’re renting our townhouse for to our parents and they realized they could get a lot more than they thought they could after their family member eventually leaves. I figure that’ll gain them an extra couple hundred dollars a month!

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avatar 2 Luke Landes

Nice, Lance! Hope they’ll at least take you out to dinner as thanks!

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avatar 3 Anonymous

Talking about my debt situation was the point that empowered me to make a change. I didn’t like people viewed me after that point and it was what pushed me to change my financial shortcomings. It can be scary to talk about, but it can lead to some good things.

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avatar 4 Luke Landes

It sounds like you felt judged by those you spoke to about your debt situation. Most people wouldn’t discuss their situation if they felt they’d be judged. Some can take negativity and turn it around for the better, while others take negativity and get discouraged to the point of inertia.

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avatar 5 Anonymous

Grayson, well to be frank its good as honesty is best policy. If people judge you then its their problem. No one is going to pay off your debt and don’t take it other way. There is good part as well which worked for me. Don’t take it other way

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avatar 6 Anonymous

In my house growing up we didn’t talk about money. We always lived in the best neighborhoods and drove the best cars, so I was shocked when I learned that there wasn’t much in the family savings account. When I met my husband, I made sure to have “money discussions” to learn if he was willing to save aggressively. I feel that having this discussion saved a lot of heartache.

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avatar 7 Ceecee

It helps to know if a friend is having money problems…..then you can suggest appropriate free entertainment for a group rather than have them not go because they can’t afford the activity. Sometimes you find that there are more people in that boat than you ever knew.

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avatar 8 qixx

Keep in mind that these rules work both ways. Sharing too much information can give another person more power. Using the situation of a job offer. Telling a prospective employer what you were paid when you were previously underpaid or when that rate would leave you underpaid in the new position often leads to a offer that is lower that what the market as a whole would dictate.

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