It is not easy to talk about money. Many people consider it a taboo, or they feel insecure about their knowledge of finance, so they avoid the topic. This is problematic when it happens with a financial advisor.
Religion, politics, and even death — three issues best avoided at the family dinner table — are easier to talk about than finances. This was the conclusion of a 2014 survey conducted by Wells Fargo, which revealed that nearly half of the U.S. population (44 percent) thought money was the hardest topic to talk about, more difficult even than the trio previously mentioned. Years later, our tendency to avoid financial discussions has not changed, as confirmed by a Fidelity Investments report published in 2018. This report establishes that 34 percent of North American couples surveyed, could not say for certain how much their spouse or partner earns. Furthermore, 33 percent of couples with debt problems find it difficult to talk about daily financial matters like expenses or budgets.
The reasons for this behavior are varied. According to experts, financial matters are considered highly personal because frequently individuals believe that their social status and self-esteem depend on it. Taboos and insecurity emerge from past mistakes. People hide certain information — even from their financial advisors — out of fear that a bad investment or poor financial decision will tarnish the image they hope to project.
This behavior only serves to exacerbate the problem, making it more difficult to find solutions to financial problems. This is why it makes sense to use the following simple steps to break the fear of talking about finances.
Speak with the parties involved
Now is the time to break the taboo: everyone involved in the household finances should talk about money, when and as necessary. According to a study carried out by researchers at the University of East Anglia (United Kingdom), joint decision-making produces more risk averse choices than unilateral decision-making. Involving one's spouse, partner, or relevant family members in the household economic decisions is a financial health strategy that minimizes the risk of making mistakes. In addition to sharing the decision-making, it is an ideal time to begin teaching the youngest members of the family about financial matters.
Revisit the conversation periodically
Conversations about money matters should not be treated as isolated events that only occur when there is an important decision to make. Talking about finances should be commonplace, so that everyone who needs to know is up to speed about the current financial situation. These conversations should always be approached with an attitude of mutual respect, without dwelling on past mistakes, focusing the conversation on shared goals and strategies for how to achieve them.
A financial advisor is an expert who helps his or her clients make better decisions, especially during key life events like retirement or an investment of capital. A good professional will focus on identifying solutions, according to each customer’s profile, providing simple, clear, and transparent information about the most suitable products. Concealing information will hinder your financial advisor from doing her job and will only cause potential financial problems to get worse.
Learn more about finance
Improving one’s level of financial education is essential to overcoming the insecurity associated with talking about money. There are many ways to do this: reading specialized publications and articles, examining your financial behavior and learning from your mistakes, using digital tools to organize your finances, or signing up for a course or conference about financial education.
The Internet has helped a lot, but you need to know where to look. In addition to the specialized publications, which are good sources of information, financial institutions offer a wide range of resources. For example, BBVA’s Center For Financial Education and Capability provides all kinds of news, best practices, and studies to promote the creation of knowledge and encourage people to acquire the necessary skills so that they can make informed financial decisions. With the confidence that you are well informed, money will no longer be a taboo and will become a natural topic of conversation.