January 9, 2019
How to Talk About Money
By: Carl Richards
At some point, you’re going to have to have a conversation about money — with a spouse, a roommate, your kids, your aging parents — but did anyone ever teach you how to talk about money? Nobody ever taught me! So, here we will help you have this difficult conversation. Not just to give you the tools to be capable of doing so, but also, hopefully, to demystify talking about money a little bit. The next time it comes up, you may even enjoy the conversation, instead of grabbing the check and putting it off until next month (along with the credit card payment).
Let’s Talk About Money
WHY IS IT SO HARD?
Picture this. You’re in your favorite coffee shop, catching up with your spouse/partner/friend. You’re smiling, laughing, having a great time. All of a sudden, the face of the person across the table from you gets quite serious.
What is it, you ask. Is everything ok?
They tell you they actually have something important they want to talk to you about.
Money. They want to talk about money.
If you’re like me (and most people I know), the idea of talking about money makes you immediately uncomfortable. Why? For the last decade I have been speaking all over the world about money. What I’ve found is that, for all our cultural differences, one thing we seem to have in common is that we were taught to never talk about it! We were told it was impolite. Unseemly. A faux pas. Fascinatingly, it’s totally all right to talk about stock markets or the economy in general. The financial networks talk way too much about that version of money. But that’s different. When it comes to talking about your money… the message is …. just don’t.
The other reason we don’t talk about money is because money equals feelings. I know, I know, if you were taught anything about money in school, it was probably that it fits into calculators and spreadsheets. It is supposed to be rational, cold and calculated.
But how many of your money conversations would you describe that way? Not very many, I’m guessing.
Money, in fact, is an incredibly emotional subject. And since nobody ever taught us this, for most of us, our first conversations about money are kind of like running into an electric fence that we didn’t know was electric. It’s shocking, to say the least.
Money is not a math problem. It’s a proxy for our moral foundations, our most cherished dreams and our deepest fears. It’s important to have a sense of precisely what that conversation is going to be like, before you have it. You wouldn’t want to sign up for a boxing match without having a clue who your opponent is. Would you?
HOW TO START
I have a powerful exercise to help you get started. It’s a technique I’ve carefully crafted over thousands of hours working as a financial adviser. It’s called “Just Start.”
Here’s how it works: Grab the person you want to talk to about money. And… just start.
Think of it like ripping off a Band-Aid. It’s probably going to hurt a bit, but you have to do it anyway. So just do it.
I promise you, it will be hard at first. And the differences between you and you partner will be pronounced. I grew up worried about money. For me money was about scarcity and security. My wife grew up in a family where money was used as an opportunity to build a business. For her, it was about abundance and freedom. When we got married, we had no idea that our different views of money might require years of work to reconcile.
So we had to just start (using the Just Start™ method, of course). It was very painful at first. We made every mistake. We still often do. But we did start, and we haven’t stopped.
Our situation is not unique. We all bring baggage to relationships, and that baggage often gets unpacked right in the middle of conversations about money. Simple things like a shared bank account or a credit card statement can bring issues to the surface that you had no idea were there. So this will probably be hard. Give yourself permission to be clumsy at first. Expect it to hurt a bit; expect it to be emotional. That way it won’t be a shock when it is. Remember that no one has taught or modeled how exactly to do this. And never forget that your relationship is more important than the money you guys are talking (or fighting) about.
The Rules of the Game
If you pay attention to only one section of this guide, please pay attention to this. Following these three simple (but not easy) rules will save you a lot of grief. I learned these rules through very painful personal experiences and after guiding more than a thousand of these conversations professionally.
Here they are:
1. NO SHAME, NO BLAME
Let’s be honest here: Your partner blew it. You said stock market, they said mutual fund, and now look. You guys could have been filthy stinking rich, and you’re not, and it’s all their fault.
Wrong. Go straight to jail, lose a turn, whatever. The second you start to shame, or blame your partner (or yourself) you’ve broken the first rule of talking about money: No shame, no blame.
Financial “events” like the one described above happen all the time. A decision is made based upon speculation about likely outcomes, and personal relationships with risk and reward. Then time passes, the future becomes the past and in retrospect, that decision is either labeled a success or a failure.
What happens next has probably happened to all of us at least once. One or both of you shame-and-blame the other for the mistake. I’ve watched countless couples do this. In fact one couple I know has been shaming-and-blaming each other for the last decade.
What good does that do?
First of all, nobody has a crystal ball (even the financial networks that pretend to). So wrong guesses are going to happen -- that’s part of the game. They’ll happen to you and to your partner. So it doesn’t make sense to shame or blame one another. But even if it did make sense, what would that accomplish? You and your spouse, presumably, both want to live a financially comfortable life. It’s unlikely that one of you is secretly sabotaging the other. If it was your partner who made the mistake this time, it’ll be you who makes it next time. Might as well extend one another some grace.
To be clear, this is not about avoiding guilt or shirking responsibility. Guilt is part of the process and accepting responsibility is what adults do. Shame and guilt are not the same thing. I love how Brené Brown, a researcher and author whose work has focused on understanding shame, explains the differences. Shame is something we internalize and we capture it with a statement like, “I’m a bad person.” With guilt, we focus on the action and say “I made a mistake.”
It’s O.K. to point out that your partner (or you) made a mistake, but it’s not okay to shame them for it. Remember, the goal here is to make fewer mistakes. Guilt is adaptive, according to Dr. Brown, because it allows us to learn. But shame just makes us feel bad about ourselves. It doesn’t help us at all.
I know this sounds hard, but don’t worry. I have a trick to help you stick to the rule!
I want you to grab a hat and a Sharpie.
No, really. Grab an actual hat and a Sharpie. Maybe one of those trucker hats with an oversized crown. Then, across the front, write, “No shame. No blame.” Every time you talk about money, wear your hat. Make sure your partner has one, too.
Yes, wearing a trucker hat with “No shame. No blame.” written across the front sounds silly. But it provides a tangible reminder of the real purpose of the rule: to get better at making smarter (however you define that) financial decisions.
2. FOCUS ON WHAT YOU CAN CONTROL
Years ago there was an empty lot near where we lived in Park City, Utah. My wife and I really wanted to buy it. After talking it over, it was clear that as much as we wanted it, it was just out of our budget, so we let it go.
Seven or eight years later, that lot is worth three times what we could have purchased it for. We missed out on a huge opportunity! To make matters worse, the lot is right next to a park that we visit frequently. So we get to remind ourselves of this blunder often.
It is so easy to get focused on things beyond our control and the resulting conversations are sure to go off the rails. Conversations about investment performance are fertile ground for this flavor of fight. But remember: You can’t control the markets.
With our “No Shame, No Blame” hats firmly on our heads, Cori and I have to remind ourselves that the only thing we had control over was the decision to buy it or not. And since we couldn’t afford it, we made the correct decision. Period. End of story. The fact that the lot tripled in price doesn’t change that.
Was our assessment of our financial situation accurate? If we agreed to sell our cars and only ride bicycles could we have bought it? Could we have looked for potential investors? Maybe. Those are all conversations we could have had because those were things under our control.
But if you don’t have the money, you don’t have the money. And there’s no point in beating one another up about that.
3. THE TIME OUT RULE
You know that feeling when you’re at McDonalds and you’re talking to your spouse about money, and you have a packet of ketchup in your hand, and you’re squeezing it so hard it’s about to pop and squirt all over her face?
That is the perfect time to use The Time Out Rule!
Given the baggage that we all bring to these conversations, talking about money is sure to get emotional. You will get fired up, you will get frustrated, you will want to spray your partner with ketchup.
But it’s super, super important that you not do that. Yes, we need to get better at having these conversations. Yes, we need to stick with it even when it’s hard. But we also need to know when to take a break.
My wife decided years ago that if she calls a time out, it means I have to go outside and exercise. Go for a run, ride my bike, lift something heavy. Something. Do I feel frustrated when she calls a time out? Of course! But the physical exercise always helps me to cool down. And that, in turn, helps us keep the conversation productive. During a time out people get a chance to settle down and to see things without the fog of emotion.
But wait — the time out rule isn’t just something you use on your partner. You can use it on yourself, too! With some practice, you’ll start to notice what it feels like just before the ketchup packet explodes and you say something you regret. It can be as easy as saying “now is not a good time for this conversation.” However you do it, remember, this is one of the rules. So no matter how much you want to keep going, you both have to honor it.
In the end, the big fights we really want to avoid are not usually about money per se, they are about something that someone says when they get overly emotional. The time out rule will hopefully prevent that from happening. Knowing that if things get heated you can always invoke it can give you the confidence to enter what might have previously seemed to be dangerous terrain.
When to Talk About Money
FINDING THE RIGHT TIME
This may come as a surprise, but believe it or not, the best time to talk about money is NOT when we are tired and stressed!
Think of talking about money like running a marathon. It takes a long time, you should probably train for it, and even if you prepare, it’s still going to hurt. Does that sound like something you want to do at 10 p.m. on a Tuesday night?
If your energy is in the basement, avoid talking about money. Save those conversations for a time when you’re feeling peppy, alert and ready to take on the world. You might even want to schedule a regular time to have a structured conversation. Planned conversations with a set list of items to review are awesome. Jot it down on your calendar and make it a habit. I would recommend doing this at least monthly.
Now, a monthly money conversation is all well and good, but what about the spontaneous chats that happen? This is where paying attention to how you feel becomes really important. Some of the most meaningful money moments can come in unplanned conversations. But be careful, this is where some of the biggest fights can happen, too.
One of the most signficant fights my wife and I ever had was on a hike in the mountains, just outside my office in Utah. It was a beautiful sunny day. We were doing something we both love to do. We were together and enjoying each other’s company. Then, out of the blue, money comes up. I can’t remember what exactly started the conversation, but given our history, I’m sure my wife was thinking “abundance and opportunity” and I was thinking “I’m going to end up living under a bridge!” I do remember feeling a pit in my stomach and seeing a huge warning light flashing “danger” across my mind...and sure enough, things went off the rails quick! Suddenly we weren’t having a fun walk any more.
Just to be clear, it was all my fault. But that’s neither here nor there. The important takeaway from this is that not all times are the right time to have the money talk. I should have invoked a time out long before things got out of hand. Since then, we have gotten better at recognizing that danger signals and tabling conversations when one of us (usually me) is not in the right state of mind.
If money comes up on a walk or at some other unplanned time, just check in with yourself and your partner and ask if now is a good time to talk. If everyone is feeling up to it, by all means, dive in. But if not, save it for another time.
Another little trick that can help: Have a file folder that you can toss reminders into for your next scheduled meeting. When you come home from work and the credit card bill is on the table, instead of opening it and getting into it right then and there, toss it in the folder so it’s on the agenda for the next meeting. That way you’ve closed the loop mentally and you will have avoided a late night, low energy fight. You can also toss little reminder notes about important things that need to be discussed in the folder. Long term things that might be super important, but not urgent, like “Remember to talk about saving for the kids’ education.”
WHERE TO TALK ABOUT MONEY
Since money conversations can be loaded with emotion, it helps to think carefully about where you have them. Don’t have them in places that you want to hold a special meaning to you. I wouldn’t have your regular meeting around the family table (or in the bedroom for that matter). I found it useful to pick a cafe that you don’t really love, one that you might not go to for any other reason and use that as the your place. The last thing you want is to ruin your favorite restaurant because you had a difficult conversation there that ended in a fight, and now you don’t want to go back.
But also remember the other kind of money talk. The spontaneous conversation on the beach or at dinner. The one where you share your secret dreams for the first time (what you would do if you won the lottery) or your biggest worries (what would happen if you couldn’t work). If the energy is good, let those run… wherever you are.
But the planned money meeting — find a place to set aside for that, and that alone.
What to Talk About
Now that we have some rules for talking about money, and some guidelines for when and where to have the conversation, we can get down to the crux of this issue.
What, exactly, do we talk about when we talk about money?
When we think of money conversations, the things that normally come to mind are things like how to save, how to invest, what credit card to pick, or when to refinance your mortgage. Having these discussions is good, but it is a little bit like talking about whether to take a car, train or plane on a trip...BEFORE...you’ve decided where you are going. Those discussions are much easier, and far more valuable if you first take a step back and get clear about why money is important to you in the first place.
So, ask yourself:
Why do you want money to begin with?
The answer to this question may coincide with answers to these related questions:
What are your dreams for the future?
How do you plan to spend your retirement?
What are your biggest fears?
If you had a million dollars, what would you do with it?
What are your insecurities?
What do you want to do with your life’s savings?
These are the big money questions. These are your compass. Forget planes, trains and automobiles for now. Where are you going? Answer that one, first.
Good money decisions move you closer to aligning your spending with your values. So the most important conversation we can have is one designed specifically to help us uncover why money is important to us. I like to call this the “Why Money” conversation.
This question is uncomfortable and can even feel a little goofy at first, but that is because we aren’t used to talking about money at all, and certainly not in this way. But if you accept that it will be a little awkward and continue exploring your answers, the conversations that follow can be life changing.
Here are some examples from the hundreds of conversations I’ve had over the years:
For Gerry, money was an important tool to relax in retirement after a successful career and provide help to his kids.
The primary purpose of money, for Sara, was to give her the flexibility to focus less on her busy job and more on her family.
Money mattered to Mark and Julie because it allowed them to pay their bills and provide a safe place for their kids to live.
The reason money is important to me, personally, is it gives me time with my family, mainly outside, and the ability to serve my community through my church.
None of these are suggestions for you, I just provide them as examples to spark a conversation. The important thing is that you identify why money is important to you. Keep pushing to see if there is anything deeper. If you’re having this conversation with a spouse or partner, take turns asking each other, and listen carefully to the answers. No judgement … remember you have your special hats on.
Keep in mind that your answers to the “Why Money” conversation may change over the years and that is just fine. This conversation is an ongoing process. Be committed to it. Write down your answer to the ‘Why’ question on a piece of paper that you can pull out when you have big (and little) financial decisions to make. Use it to help you align your financial decisions with your values.
GUESSING AT GOALS
The next thing to talk about is goals. But relax, no one is going to ask you what you think you want to be doing 23 years from now or what you hope your utility bill will be in 17 years. Think of goals as nothing more than guesses. Because that, indeed, is what they are.
So guess! Go on, you have my permission. What are your goals? I bet things came up in the “Why Money” conversation that will give you some clues. The purpose of this conversation is to put a stake in the ground and head in that direction.
While it can be helpful to think 20 or 30 years out, I find it most useful to spend time getting specific about the next three years:
Imagine that you are sitting down three years from now to review your financial situation, what would have to happen in order for you to feel like it was successful?
Jot those things down. Call them goals.
Then repeat this conversation, but change the time frame to 90 days:
What would have to happen in the next 90 days in order for you to feel happy with your progress?
Jot those down … call them goals.
You can go bigger or smaller. 30 days, 30 years, whatever works for you. The point is to keep in mind that your short term actions affect your long-term trajectory. When navigating, it’s good to keep both in mind.
Remember to give yourself permission to relax when talking about these goals. Let go of the false sense of precision. Life is not that precise. These are just guesses. They will probably change – that's called reality – but they will give you a sense of direction and provide context for your money conversations.
Once you’ve guessed at a few goals, it is time to talk about next steps. This should be a little easier. What’s the next smallest step you can take? It might be something like “Review the credit card statement for recurring charges you are no longer using,” or “Figure out how much money per month you spend at Starbucks.” Depending upon how important moderately expensive, moderately good coffee is to you, your monthly Starbucks spending report may encourage one set of actions or no change at all.
Take notes during this conversation. Write them down on a piece of paper and think of that as your one page financial plan. Keep it handy so you can use it as a guide when it’s time to make financial decisions and to aid you in future money conversations.
Talking to Your Kids
“Daddy, why can’t I have an iPhone X?
“Because you’re too young for a $1,000 phone.”
“But Daddy, all my friends have one! Why can’t I?”
“Because you’re 5 years old!”
Correct me if I’m wrong: This is not a conversation you want to be having.
And yet, talking about money with your children is an incredibly important thing to do. For sure, they are going to be talking about money with their friends and maybe even their teachers and coaches. And you know they’ll be inundated with emotions based upon what their parents do or don’t choose to do with their money.
Fortunately, talking about money with your kids can also be a lower-pressure practice-round for talking with your spouse. Some of my early experiments with money conversations were with my kids. It was uncomfortable at first. When they would bring up money I would respond by telling them it was none of their business (politely!). Or informing them that we don’t talk about such things. But once I realized how pointless, and self-defeating that was, I simply asked them to “Tell me more”, or inquired “Why do you ask?”
This felt like a weak response at first, almost a cop out, but it was far better than what I was doing before and has resulted in some remarkable discussions. My family all feels much more comfortable around the subject and it has lost some (though not all) of its emotional charge. And what’s more, there’s no more need to keep secrets or change the subject. “Why did we choose to spend or not spend our money on that?” “Because our values are A, B and C. Billy’s parents are guided by their own set of values. That’s why they made a different decision.”
While we’re on the subject of kids and talking about money, think of the message we’re sending when we shut down hard conversations. We’re telling our children that there are things, very important things, that they can’t talk to us about. Imagine when other very important things like sex, religion or politics come up...are they allowed to talk to us about those?
Time to Change the Conversation
I get asked all the time. “Of all the things I could possibly do to get better at making money decisions, what is the one most important thing I could do?”
Should I stick to a stricter budget?
Should I track my spending better?
Should I cut up my credit cards and throw them away?
What’s the one thing? The silver bullet?
The best answer I’ve managed to come up with, after 20 years of thinking about it, is not always popular. It’s not a secret formula, it’s not going to help you get rich quick, and it’s not easy.
My answer? Talk.
That’s it. That’s the answer.
Just. Talk. Talk about money. It’s that simple.