Why is it important to talk about money?

Talk about money – The last 18 months have been tough for many, and unfortunately millions of people’s finances have been affected by Covid-19. Everyone’s situation is different, some have to tighten their spending a little, while many have unfortunately found themselves unemployed, unable to pay their bills, and in a tricky situation. Although one thing remains the same: talking to those close to you about money is crucial to avoid your financial problems getting out of control.

University College London surveyed 15,000 people in 2015. The results showed that people are seven times more likely to tell a stranger intimate details about their bedroom activities than to discuss how much money they earn. Crazy, huh?

This may be unsurprising, as it has historically been considered rude to talk about money. Although attitudes are slowly changing.

As a company in which we ensure that people have control over their finances, we are the ones who have to reinforce the importance of talking about money. Here are just three reasons why we feel it is so important:

1) To teach financial literacy to younger generations

Studies have shown that the earlier a child is introduced to the responsibilities of money, the better prepared he or she will be to manage it in later life. Earning money and knowing how to budget and save are imperial life skills that can and should be taught from an early age.

This could start by being transparent about your family’s financial situation, allowing children to do mini jobs to earn pocket money, or introducing them to investing and allowing them to watch their own pot of money grow. There are many things you can do to help ensure money isn’t a source of stress for your children as they become adults.

2) To improve our mental health

Financial worries can become a burden on our mental health and lead to survivor mental illness if you do not ask for help when needed. Do not bury your head in the sand. Financial problems do not disappear. It is important to address financial challenges directly by talking to the right people and asking for support.

It can be an empowering and emotionally rewarding experience. The first people to whom you should turn could be a partner, family member or close friend. If you do not have this support network, there are many specialist organisations with whom you can speak in confidence and free of charge.

3) To make better financial decisions

The more honest you are with yourself and your loved ones, the better the final result will be. For example, someone who is ashamed of a poor credit rating can withhold this information from their partner. Until it comes to a joint mortgage application or joint account that could be rejected, but if they had spoken about it earlier, they could have taken steps to overcome the credit difficulties before they want to buy a home.

There are many ways in which you can make better decisions if you have all the information you can give. But it first requires you to be open and honest about your situation and be ready to tackle it!

How to talk about money

Ready to talk finances with your family or partner? Here are a few tips from us:

Prepare for the conversation

Time – The perfect time to talk about money is probably not after work or when bathing the kids. So choose wisely.

Don’t pick a moment when one of you is stressed, tired or in a rush. Instead, choose a moment when you’re both in a chilled environment, feeling positive and have energy. Maybe a Saturday or Sunday over lunch?

Location – While you are encouraged to talk openly about money with your family or partner, you may not feel so comfortable talking about it in the presence of others. So make sure you are at home alone, or perhaps walking or in a quiet area of a cafe.

If you do not live together, you might also want to hold your conversation on “neutral territory” – i.e. not at one of your homes. This can help calm both minds and create a neutral atmosphere.

Talking points or goals – Have you ever left a meeting feeling like it was a complete waste of time? Poor meetings are often the result of unclear agendas and poorly defined goals.

If there are several factors you want to talk about, you should split them into several conversations. In this way, the “agenda” and goals of each discussion should be crystal clear, and give you more time to have a proper conversation. Try not to finish the conversation until your goals are met, or re-schedule some time to discuss it further.

Start the conversation

Once you are clear of what you want to get out of the conversation and have an idea of where and when the best time is to have it, it is time to start.

Bear in mind everyone’s different. Some will be fine talking about money at the drop of a hat, while others might prefer some warning. Suddenly asking “What’s your credit score?” as you’re having dinner after work may not result in the answer you were expecting. If you believe the other person would appreciate a heads-up – and we dare say that many will – think about introducing the idea of talking about money gently and agreeing on a time to discuss it.

However, sometimes waiting for what can be perceived as an “important chat” can cause much anxiety. So you may decide it’s the best approach to just come out and say it. That’s fine too, so long as you do it at the appropriate time and location (as explained above).

It’s likely you’ll know the other person well, so use your judgment to decide the best way forward. Remember:

Take turns to speak
Be honest
Be aware of emotions
Agree any further actions

Consider writing down any actions that you need to take before the conversation concludes. This might include:

Researching a particular question or topic
Calling a bank or loan provider
Downloading a credit report
Gathering relevant paperwork
Seeking help from a support organisation

How to talk to partner about money

Talking to your partner about money can be part of a healthy relationship. Regularly discussing your finances can help you deal with minor problems before they become bigger ones. So try to find time to make it part of your routine, perhaps agreeing to talk at brunch or on a long walk monthly.

If you are in a more urgent situation or requiring a “bigger” discussion, consider following the steps mentioned above. The advantage of knowing someone well is you will probably have a clear understanding, which will allow you to avoid the emotional pitfalls that can get in the way of a productive conversation.

Talk about your finances and don’t be afraid to seek help.

Money can be a confusing and complex area at the best times, and it can be traumatic when you have financial difficulties. In these situations, sometimes talking about money is not enough. Further advice is needed, or perhaps you need a neutral ear for advice. To schedule a no obligation initial consultation with one of our financial advisors, click here.

Lawsons Equity – Financial Advisors Malta

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested

Lawsons Equity Limited is a company registered in Malta with company number C49564 and licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994.

Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here

In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

Why is it important to talk about money?