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When it comes to discussing issues revolving around money with parents or partners, the conversation can get awkward, or even aggressive, quickly. As a result, many people try to avoid bringing up money matters as much as possible. This is the wrong approach. Money inherently carries with it numerous consequences, and outlining those consequences and the responsibilities involved is important to insuring financial stability.
Talking about money with your family:
Talking to your parents about their debt and assets, in regard to their passing, will probably feel uncomfortable. You don’t want to acknowledge their death, or seem greedy by talking about the money they may or may not leave you. But when they die you will most likely be the one settling all their loose ends. Set up a time with them to meet about this specific topic. Let them know that this is why you want to see them, and give them time to collect all the necessary paperwork to go over it with you. Take notes, and even turn it into a document, so that when the unfortunate time comes you will already have the steps outlined, and can keep a clear head about one aspect of an otherwise hard time.
When my grandmother recently died, she had multiple accounts over numerous institutions, not to mention bills, housing payments and other financial obligations. Since my mother had already gone over all the finances with her, including having a joint account with my grandmother to be able to resolve all these financial obligations once she passed, it was one less headache for her during the grieving process. Although you will never be responsible for a parent’s debt, it is important to know where all the money will be going.
With your partner:
Going over finances with a partner or setting up restrictions or budgets can be one of the most difficult things in a relationship. In fact, it can even be the thing that ends a relationship. Despite this, it is necessary to traverse this monetary minefield so that the two of you don’t fall into debt. This is made especially clear when you look at credit card default statistics over the past few years. If you are living with your partner, and it’s clear that this will continue to be the arrangement, it may be a smart idea to open a joint checking account. However, I am not suggesting that both of you start dumping all of your funds into this account. Instead, add up all the bills and expenses that the two of you share, once you have that dollar amount, agree on an amount that both of you can contribute to that shared account on a weekly or monthly basis. Designate one of you to pay all the bills as well, so that you don’t end up double paying either.
By putting only the necessary equal funds into a shared account you avoid two things. First, one of you won’t have to come after the other for money that’s owed—that’s a recipe for an argument each month. Second, you are both putting in the same amount and only using it for communal needs, so you can avoid arguments about one person not contributing enough, or spending on frivolous items that the other person won’t be using.
This mentality should span all other financial obligations that the two of you share. Things like credit cards for personal expenses and other singularly personal needs should be kept separate. If the two of you decide to get a joint credit card, it should again only be used for communal needs and should only be paid down from the money in your joint account (extra weekly or monthly funds will most likely need to be added). There may be small arguments about an unnecessary expense at one point or another, but by sticking to this plan there will most likely be few and not such a situation that will cause a financial meltdown within the partnership.
Talking about money in the personal sphere is definitely not easy, but money is all about business. There’s no other reason for it. As such, treat every interaction—even personal relationships—as a business transaction when it comes to finances. Making it clear that the discussion is solely about finances—and not about anything personal—should make it a little easier. Writing down everything that was said and agreed upon, and given to the people involved will insure that everyone is on the same page and can handle a minor hiccup should it arise.
Author Bio: Michael Pope is a personal finance blogger for NerdWallet.com, a site dedicated to promoting financial literacy and helping people answer real-life questions such as “How do I start paying down my debt?” and “What should I do as part of my retirement planning?”
I agree that talking about money with family can be a very difficult thing. If you’re married, this can be especially difficult in you and your spouse are not on the same page financially.
John S @ Frugal Rules recently posted..How to Spend Money Like the Government
Good point John. It’s good practice to starting talking about financial topics and money with your partner sooner rather than later and know that you’re going to have disagreements.
We’re pretty good with talking about money, thankfully. We try and talk about it often, so that nothing is surprising to the other.
Michelle @ Making Sense of Cents recently posted..Glad I’m Done With School
Being open and talking often are both very important when it comes to talking about money!
It took my wife and I a little bit of time to get on the same page. She has never been a spender, but the problem lies with me. No matter how much money we make I always feel that it is not enough.
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I think it is easy to think that way when you’re a finance blogger. You’re constantly being told how many millions you need for retirement and hear all this negativity about people’s financial status.
It’s great that your wife and you were able to get on the same page. Try to dig deeper into where your attitude about money comes from and help explain this to your wife. Why do you think no matter how much money you make you always feel that it is not enough?
Being that I work with money on a daily basis, my wife knew I was comfortable talking about it. In fact, maybe too comfortable, if that makes sense. I am also comfortable talking about it with my parents, and they often come to me for some advice (no, I am not a financial advisor).
Share with us some pointers and advice on how to talk about money with your close ones for people out there who are not yet comfortable talking about money.
I really want to be on the same financial page with my other half. Not being able to about money after several attempts would be a reason not to pursue the relationship.
Some family members are making mistakes with their money and will probably not have their children inherit as much as they could (because the state will tax 50% and they don’t look for more efficient ways, not because they splurge), but it is their money after all and I don’t want to interfere, they are free to make mistakes.
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I agree that it is important to be able to talk about money with your partner. For something so crucial there needs to be open communication. I think it’s even tougher to talk to family members about this kind of thing because they can really say it’s none of your business how they handle their money.
These conversations are definitely tough – easier if the finances are in good shape though. I wish my dad would simplify his estate planning though – it involves a complicated trust which as far as I can tell doesn’t achieve much UNLESS my stepmother turns into the wicked witch of the west, in which case it might direct some of the estate to me. In my opinion the complication isn’t worth the result since she doesn’t seem terribly wicked.
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You bring up a good point. Estate planning is important and it’s important to be comprehensive and thorough.
Being on the same page doesn’t necessarily mean every talk about money should be treated like a business transaction. We were pondering car expenses the other day and some confusion came about because the Mr thought I was focused on $$. I had to stop and say, “I just want you safe and happy. After those things are taken care of we can worry about money.”
Mrs. Pop @ Planting Our Pennies recently posted..What Do You Mean, Average?
Very true Mrs PoP. Sometimes there are more important things than money. So people should try to not let money control your relationship decisions too much.
One of the hardest things for us is talking to our in-laws. My wife asks me what to say beforehand. It’s something we need to get better at but it isn’t easy
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I can see why that could be tough. You just know you’re under some extra scrutiny from your partner’s parents. For some reason I haven’t had a problem with that.
Mrs. CBB and I have no problems at all talking about money. In fact we probably talk too much lol. Both of our parents have talked to us about money, wills, bank accounts etc. Growing up for both of us money was not a secret in our households and was taught to us early. I know one of my mates who is scared to talk to her spouse for fear he will get upset or potentially see her as a downer, or controlling his spending hence leading to marital breakdown. I believe money is and should be a subject that should be talked about at the beginning of a relationship, heck simply while dating is not a bad idea. Why get into something you aren’t ready to take on and then have to break it off and break someone’s heart. Yes money isn’t everything but it is the number one reason people divorce. Either way you get stuffed.. follow your heart or work your tail off to help pay off your spouses debts.It’s personal choice but should be discussed. Mr.CBB
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I’m glad I talked about money early on in my current relationship. It made it a lot easier to talk about going forward. If that talk was put off too long it might’ve lead to an uncomfortable situation. It’s better to get that kind of stuff out there to try to get on the same page with your financial viewpoints.
I enjoy talking about finances. The line I draw is when it becomes personal, because I don’t want to leave myself vulnerable. I don’t have problems discussing about money with anyone right now because I don’t share my finances with anyone else
But I’m sure once I get married or something then the reality is that money might become an issue which I’ll need to discuss with my partner. Having a shared account sounds like a great idea.
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It does get a bit awkward when discussing personal details of your finances since it really says a lot about you. I’m still undecided about shared accounts, but I think it could work well to have that kind of setup but it depends on the situation.
Jeremy…I’m back!! Man, I’ve missed the blogosphere for a few days and I’ve been itching to get back in the swing of things.
Well, talking with family is extraordinarily difficult for most people when it comes to money. Luckily for me, my career change to become a financial advisor totally broke down the walls and allowed me to talk more openly with the people that were close to me. Furthermore, I think some started to see the successes I was having (or the fact that I didn’t worry as much about money any longer), and that caused them to start asking me questions about what I was doing differently.
There are so many difficult relationships out there that it’s impossible to tell everybody out there a “surefire” way to solve their conversation roadblock, but ultimately it comes down to connecting and talking with your spouse/friend/family member. You have to be honest, sincere, and not come across as being preachy. It’s tough to do, but can be done.
If that doesn’t work, I found that eventually the person in question will open up once they’ve hit rock bottom.
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I agree that thre is no “surefire” way to solve conversation roadblocks. Open conversations and honesty is key when it comes to issues abut money.
I think it is hard for men to talk about money because we place some of our value on how well we provide. It is a self-confidence issue that some men have a problem facing… It is tough to separate the old “provide for the family” importance and our worth outside of money.
Jason Clayton | frugalhabits recently posted..Five Ways to Help your Kids Learn about Money
There’s still definitely social pressure on men to provide for their families, and this is one of the reasons why men find it hard to talk about money sometimes.
When my husband and I sat down to figure out how to get out of debt, it was one of the hardest conversations we’ve ever had, but resulted in some wonderful changes. I would encourage couples to get everything out in the open from the start and periodically just to make sure you’re both on the same page.
This is a great example of how talking about money sooner rather than later is a rewarding and worthwhile investment. Thanks for sharing Kim!
In general, the reasons it’s hard to talk about money are because
- money reveals so much about our heart/identity
- we feel passionate about our attitudes
- we are insecure in ourselves and/or our philosophies
… and/or we suspect the other of these things. Few things blurt out our personalities as much as the way we handle our money.
I’m blessed that my wife and I feel the same way about money and so we talk about everything, but we have acquaintances of which that’s not always true…
We all have different attitudes and values around money and that makes it hard to talk about money. The reasons you cited above are all very true.
At one point, I probably knew more about my parents financial situation then they did. Back I’m high school, I would balance my mom’s checkbook for her because of her numerical dyslexia.
Coming from an immigrant family with parents who didn’t speak English, I also had to take care of all my parents’ finances and knew more about my parents’ financial situation than they did. The hard part was getting them to talk about their finances.
My father is a truck driver. My mother called herself a “single mother for 27 days out of the month.” So they didn’t really talk much about their finances aside from there not being enough money.
Talking about money should not be a taboo subject. It should be talked about because money can cause a lot of repercussions if not planned well.
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Definitely. Money is such a big part of our lives that we shouldn’t just avoid talking about it. We should be open about that kind of thing to be able to help each other better manage our money.