By Jon Theriault, MBA, CFP®
If you have found it difficult to talk about your finances at home lately, take comfort in the fact you are not alone. You might be able to get away with less communication when times are good, since a healthy family income, strong financial markets, and rising home prices can combine to mask what might otherwise be a systemic financial or communication problem. It is when the good times take a turn for the worse, that these issues are exposed.
When these problems surface, the mere thought of talking about money might create anxiety or downright dread, yet such conversations need not always be viewed in such a negative light. Over time, in fact, such discussions can help bring couples and families closer together whereby each person’s contributions and compromises are more regularly appreciated, certain values can be shared and developed, and what may otherwise have been a disaster-in-the-making can be averted. The question to be answered is, how do we get from here to there?
If you are among those having difficulty talking about your finances, here are ten basic suggestions designed to help. Although customized for couples, these principles can generally be applied to nearly any relationship where your finances impact one another:
1. Slow Down – If your finances are in trouble, you will understandably want to fix everything immediately. But many financial problems often take a long time to develop, so it may take a while before the right solutions are found, much less implemented. Before sitting down with one another, do your best to relax as most financial problems will require both time and compromise to be resolved.
2. Keep It Simple – In the event you haven’t talked about your finances in quite some time, it may be best for the initial conversation to remain general in nature. You might start with something philosophical such as sharing your goals and priorities and how they may have changed over time. Attempting to reach some common ground regarding “the big picture” will help as you move into more specific areas.
3. Choose Your Time Wisely – Spontaneous scrutiny of the credit card bill at the end of a long day is not a very good idea. And nothing says “sweet dreams” like raising financial concerns with your spouse after the lights go out. Your best bet is to schedule a specific time and date in advance, knowing your finances are the primary topic for discussion, and be sure there are no distractions or conflicts.
4. Be Prepared – As in business, showing up for a meeting unprepared is a sign of irresponsibility. Treat any planned discussion about your finances as a high priority and be sure to have done any agreed upon preparation in advance. This will demonstrate respect for one another and help to avoid spending any of your dedicated time tracking down a checkbook or an online password.
5. Drop Your Weapons – When one person is highly frustrated with the other, tread carefully, since any type of discussion that begins with hostility and accusations will likely not end well. If this is the case, admit your unhappiness with the situation beforehand, understanding the acknowledgment of past mistakes or possible compromises may come in time, but not until you both agree to a cease fire.
6. Take A Break – If either of you become highly uncomfortable or anxious during a discussion, either take a break or table the discussion for another time. If the matter causes the same feelings the next time around, attempt to reduce the issue into smaller parts as the problem may simply be too large to work through in a single conversation. Do not, however, simply ignore the problem altogether.
7. Maintain Transparency – Once resources have been combined, financial infidelity undoubtedly poses one of the single largest threats to any relationship. If one or both of you are concealing something such as hidden accounts or a secretive spending habit, it is only a matter of time before the truth will surface. Honesty and full disclosure are prerequisites to effective communication about your finances.
8. Nobody’s Perfect – Your initial conversations might be awkward and frustrating, and rest assured there will be some surprises and mistakes made along the way. So allow for flexibility and give yourselves a break from time to time. Your finances will warrant a great deal of attention throughout your lives, so do your best to remain focused on improvement rather than perfection.
9. Finish Strong – Towards the end of any discussion, be sure to confirm what you believe you heard, clarify any compromises or action items that were agreed upon, and set a date for your next meeting. This will help minimize any misunderstandings while improving your accountability, and perhaps most importantly, will give you the opportunity to acknowledge one another’s valued time and effort.
10. Don’t Get Too Comfortable – Once you begin seeing positive results from your discussions or any of the changes you have implemented, there may be a tendency for one or both of you to get complacent. Regardless of your circumstances, or even after the good times return, discussing your finances on a regular basis is imperative to your long term financial health. So keep at it, without exception.
In closing, I was recently reminded of the power of communication during a meeting with a couple who happened to be facing some very difficult financial circumstances. Over the course of two hours, what began as a simple chat about today’s challenging job market gradually evolved into a very honest and emotional conversation wherein both husband and wife revealed their independent fears and frustrations, but ultimately took joint ownership of their situation.
We did not solve all of their problems that night, but through effective communication we were able to move towards identifying suggested actions and solutions rather than dwelling in uncertainty and silent frustration. I decided to write about this topic after reading their thoughtful thank you note the next morning – the last sentence of which concluded “…simply being able to talk about it with someone was a big help.”
Perhaps the same can apply for you.