How to talk about money with loved ones

A guide to facilitating financial conversations

Money matters can be difficult to talk about and often considered taboo. But having open and honest money conversations can be crucial for maintaining a healthy relationship. These conversations can provide clarity, reduce misunderstandings, and help you work toward shared financial goals.

Why money conversations matter

Money-related conflicts are a leading cause of relationship stress, so discussing financial matters proactively may help you avoid future disagreements.

Here are a few examples of what constructive money conversations can do.

• Align your goals: Discussing finances helps ensure that your short and long-term goals and aspirations are aligned. This alignment reduces potential conflicts in the future.
• Build trust: Hiding financial concerns can lead to misunderstandings and resentment. Openness about financial matters builds trust within relationships.
• Improve planning: Financial discussions pave the way for better planning. Whether it's saving for a vacation, buying a house, or retiring comfortably, talking about finances helps you build more effective plans to reach those goals.
• Reduce surprises: Transparent conversations enable you to create realistic budgets that cater to you and your loved one’s needs, ensuring a smoother financial journey.

How to initiate the conversation

We all have varying experiences, beliefs, and attitudes toward money, which can lead to strong emotional reactions during discussions. Approach the conversation carefully to avoid triggering negative emotions, defensiveness, or misunderstandings.

• Choose the right time and place: Find a comfortable and private setting where everyone can focus without distractions. Choose a time when everyone is relaxed and receptive – it’s best to avoid moments of stress or exhaustion.
• Set a positive tone: Approach the conversation with a positive attitude. Emphasize that the goal is to work together.
• Express your intentions: Communicate your desire to have an open and honest conversation about finances. Emphasize that you're interested in understanding each other's perspectives and finding common ground.
• Maintain an open mindset: Keep in mind that financial situations can vary greatly. Approach the conversation with empathy and a willingness to understand different perspectives.
• Be a listener: While sharing your thoughts is important, being a good listener is equally vital. Allow all parties to express their views and concerns.
• Focus on "we”: Frame your conversation around shared goals. This fosters a sense of togetherness and cooperation rather than blame or division.
• Stay calm: Financial conversations can become emotional. If tensions rise, take a break and return to the discussion later.

Start with the essentials

A good way to ease into your conversation is to ensure everyone involved knows where records are kept and how to access them. It’s beneficial to create a list of all accounts, debts, and investments as well as important legal documents like birth certificates and more. Additionally, you’ll want to make sure all parties on joint accounts have a username and password to access the information.

Key questions for your discussion

Here's a list of key questions to jumpstart and guide your financial discussions. Don’t be afraid to add others. Everyone’s situation is different.

1. What are our financial goals? Discuss short and long-term financial objectives, such as buying a home, saving for education, retirement, or travel. Understanding shared goals creates a sense of purpose and collaboration.
2. What are our current financial situations? Share individual income, debts, assets, and financial obligations. Be transparent about your financial histories, including credit scores, loans, and investments. This helps in creating a holistic view of your shared financial situation.
3. How will we manage our finances? Decide whether you will combine finances entirely, maintain separate accounts, or use a combination of both.
4. What is our approach to budgeting and spending? Talk about income sources, monthly expenses, and savings. Establishing a clear budget can help you manage spending, avoid unnecessary debt, and stay on track for your goals.
5. How do we handle shared expenses? Decide on a strategy for managing shared expenses, whether it's splitting costs equally, proportionally based on income, or using another arrangement that suits everyone's circumstances.
6. Are there any financial obligations or responsibilities that need to be clarified? This includes understanding who takes care of bill payments, taxes, and financial paperwork.
7. How do we handle debt? Discuss any existing debts, how you plan to manage them, and your approach to taking on new debt.
8. How will we build an emergency fund? Discuss the importance of an emergency fund and agree on how much to save. This fund provides a safety net during unexpected financial challenges.
9. How will we plan for the unexpected? Talk about how things will be handled if one of you falls ill or is in an accident. Being prepared is invaluable when you’re faced with the stress of a situation like this.

Make it an ongoing conversation

Schedule regular check-ins to discuss progress, setbacks, and adjustments to your situation. Regular communication helps you stay aligned with your goals and adapt to life's changes.

Money conversations are not always easy. Approach them with empathy and transparency, thinking of them as a collaboration. You’re on the same team, and these conversations can return dividends when it comes to building a strong relationship.

For more on having financial conversations with loved ones, check out other tips in this short course.