Perspective

Speak Up! How Financial Conversations Can Provide a Richer Life

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Speak Up! How Financial Conversations Can Provide a Richer Life

Did you know that over two-thirds of Americans would rather talk about their weight than discuss their finances? And it’s even tougher for women to bring up the subject. According to the 2015 Fidelity Investments Money FIT Women Study, 80% of women have refrained from speaking about money with a significant other.

There are many reasons for avoiding sensible conversations about finances. Some people find money talk to be “tacky”, some fear being judged by others, while many were raised to never speak about finances. However, open conversations about money, especially with loved ones can actually help women live a more secure – and more peaceful – financial life.

But how do you have those courageous conversations?  Kathleen Burns Kingsbury – a wealth psychology expert, founder of KBK Wealth Connection, host of Breaking Money Silence and an internationally published author and speaker – offers timely tips on how to speak openly about money with those closest to you.

How do you broach the subject when you’ve been in a long-term relationship, especially when one spouse has handled the finances for 10+ years?

Talking about money can be challenging whether you’re in a new relationship or a long-term union. Even if you aren’t the one who meets with the financial advisor or pays the bills, it’s still important to understand how the family finances are managed. Try to participate in the financial decision-making whenever possible. If you are the financially-dominant spouse, it’s vital that you encourage input from your partner to get new ideas and a fresh perspective. Healthy financial conversations will benefit everyone involved both financially and emotionally.

The best way to begin the conversation is to ask your partner for a 15-minute financial meeting.

Struggling to bring up the topic? Use these tips to start a successful discussion about money:

  • Give your partner time to process your request, then find a convenient time to meet. Pick a time when both of you can be as relaxed and focused as possible.
  • Make sure there are no disruptions.
  • Keep the initial meeting short.
  • Start by asking your partner to share a financial success story. Then, share a financial success of your own. Starting off on a positive note will pave the way for learning from each other.
  • You may want to review the Money Talk Guidelines to establish conversational ground rules.

Once you’ve had the first meeting – congratulations! It’s time to reward yourselves. Go on a nice walk, watch a fun movie or simply pat yourself on the back. Pairing a positive event with each money conversation makes it more likely that you both will continue to engage in more “Money Talks”.

Advice for young couples or people who are re-entering marriage after being divorced or widowed?

When you enter a marriage, it’s important to break money silence with your romantic partner and have a series of premarital money talks.

Here are six suggested topics:

  • Separate or Joint Accounts: Will you pay for expenses separately, jointly or through a house account? Will you have separate accounts that you each control? How much money is okay for each of you to spend without checking in with the other person? How will you make joint spending, saving and investing decisions? How do you feel about combining finances versus keeping your money separate?
  • Debt: What debt do you currently have and what is the status of this debt? Do you have past-due loans or outstanding credit card debt? If so, do you believe that you and your partner should pay that debt off together or should that be each partner’s individual responsibility?
  • Real Estate: What are your thoughts on buying versus renting a home? What does owning a home mean to you? What are you willing to give up, if anything, to buy a home?
  • Savings: What is your philosophy when it comes to saving money? What were you taught about saving money growing up? How much do you currently have in your savings account(s)?
  • Spending: What is your philosophy when it comes to spending money? What is your comfort level with spending? What are your thoughts about paying cash versus using a credit card when making purchases?
  • Philanthropy: Do you believe in charitable giving? If so, which charities do you support? How much of your income do you believe you should give to others?

The more couples open the lines of communication at the start of a marriage, the better off they will be in the long run. In fact, couples that regularly engage in money talk report higher marital satisfaction.

Advice for people with young kids or grandchildren to help them start practicing how to talk about money and finance?

Teaching the next generation about money is as important as teaching them how to eat nutritiously, exercise regularly and find their life purpose. Unfortunately, schools in the United States no longer support “financial fitness” for their students. As of 2017, only 17 states required high school students to take a course in personal finance.

Bottom line: it is up to you — the parent, aunt, uncle or grandparent — to empower the next generation to be financially savvy. The good news is that teaching kids about money can be a fun way to strengthen family bonds. And you may just increase your own financial intelligence along the way.

Here are five tips on how to become a money role model:

  • Tip #1: It Is Never Too Early or Too Late – I am often asked what the best age is to start talking to children about money. My answer is always that it’s never too early to start. Financial literacy experts encourage parents to begin money conversations when a child is between ages five and six, and then continue the dialogue over the child’s lifetime. If your child is 15 years old and you still have not broken money silence, start the money conversation today.
  • Tip #2: Keep the Lessons Age-Appropriate – Financial literacy training needs to be age-appropriate. Teaching a five-year-old about interest rate risk, hedge funds or the global economy does not make sense. Instead, start teaching a five-year-old the names of coins and corresponding monetary values. Around age seven, have them practice making change and introduce them to the notion of wants versus needs. This is also a good age to introduce the idea of philanthropy. Find a charity the child cares about and help them make periodic donations. This can be as simple as putting a percentage of the child’s monetary gifts into a special piggy bank for donations. As children grow, so can the complexity of the lessons. As a teen, your child could hold a fundraiser and donate the money to a worthy cause. The relevant tasks would include identifying the charitable organization, recruiting helpers, fundraising marketing and donating funds collected. It’s still the same underlying philanthropic lesson, but the process is more sophisticated to match a teenager’s maturity level.
  • Tip#3: Be Consistent and Repeat Important Lessons Over Time – Teach money lessons consistently over time. Tie these activities to the young person’s social and emotional development. Some concepts will need to be repeated over time, as new ones are introduced along the way. For example, an eight-year-old girl interested in starting a neighborhood dog-walking service can learn how to set a price for her services, collect money from her customers and learn the value of hard work. A 16-year-old girl starting a similar dog-walking service can also learn these important money skills. However, she might be ready to tackle accepting credit card payments and using a financial software program to manage cash flow.
  • Tip #4: It’s Not Just about Dollars and Cents – Communicating your core values and showing kids how to express these values through their financial habits is a big a part of financial intelligence. If you grew up in a working-class environment, your parents may not have focused explicitly on sharing their values with you because they were busy earning a living. If you grew up with affluence, money talk may have been discouraged as impolite. No matter what, discussing why and how you spend, save, invest and give money is a very useful lesson. Your kids will pick up some of these messages along the way, but don’t leave it up to chance. Talk about it.  Teach your children how to master the art of delayed gratification, learn from your financial mistakes and appreciate that reaching a long-term goal may involve short-term struggles. These lessons help your child foster a healthy relationship with money and help them develop the emotional intelligence needed to be financially responsible.
  • Tip #5: Capitalize on Teachable Moments – Seize the teachable moments for learning that come up during the day. If you are grocery shopping and your son is haphazardly throwing pre-packaged food into the cart, let him know you value locally grown products. Discuss why you are willing to spend a bit more for these items. Teachable moments happen everywhere, from the movie theatre, to the mall, to the car ride home. Keep your eyes and ears open and use the moments as they arise.

Any other advice you have for making sure you are engaging in important financial conversations with your loved one?

Money silence has a way of letting us all off the hook. Even if you think talking about finances with your partner, aging parent or child may be uncomfortable, doing so will help ensure better financial literacy and security for all involved. Fight the urge to avoid money talk. Work with your financial advisor to learn the skills to engage in this valuable and often rewarding conversation.

Meet the Expert

A wealth psychology expert, founder of KBK Wealth Connection, host of the Breaking Money Silence® podcast, and an internationally published author and speaker. Breaking Money Silence: How to Shatter Money Taboos, Talk Openly about Finances, and Live a Richer Life is Kathleen’s fifth book.

Named one of nine amazing conference speakers in 2017 by Investment News, Kathleen is a sought-after keynote speaker and consultant on the topic of women and wealth and couples and money. Her mission is to empower women, couples, and families (and the advisors who serve them) to shatter money taboos and communicate more effectively about financial matters.

As an expert on financial psychology, Kathleen has appeared on television and written for consumer and trade publications. Her work has been featured in The New York TimesThe Wall Street Journal, PBS News Hour, Money MagazineTODAY Money, Forbes, and CNBC.

Kathleen is an adjunct lecturer at the McCallum Graduate School of Business at Bentley University and a guest lecturer at the Personal Financial Planning program at Texas Tech University. She received an Undergraduate Degree in Finance from Providence College and started her career in retail banking before becoming a commissioned Bank Examiner with the FDIC. Due to her desire to coach executive management on improving performance, she attained a Master’s Degree in Psychology, became a Certified Professional Co-Active Coach, and founded her consulting firm, KBK Wealth Connection.

Learn more at www.breakingmoneysilence.com and www.kbkwealthconnection.com.

At SignatureFD, we believe that people want to make an impact with their wealth – their time, their money and their relationships. Managing wealth is more than just managing money. It’s understanding your values, vision, and goals, then helping you design a plan to live confidently and build the future you want. SignatureWOMEN® helps you simplify your financial life, connect with others in our community and take control of your financial future, empowering you to make confident decisions and live with impact.

For information about SignatureWOMEN®, please contact Page Harty, Partner and Director of SignatureWOMEN, at page.harty@sigfddev.wpengine.com.