Talking about money with your loved ones can be awkward. It can be uncomfortable. It can be so difficult that you simply avoid bringing the topic up altogether.
But you’re doing yourself no favors by putting off the conversation. It will be difficult for you to save for a house with your partner if you cannot cope with each other’s bad spending habits. You don’t want to go out with friends weekly to add to your credit card debt because you don’t want to mention you’re on a tight budget.
Erin Lowry, financial expert and founder of Broke Millennial, focused her latest book “Broke Millennial Talks Money” on the topic of navigating difficult financial conversations. She recently joined The Penny Hoarder for an online discussion where she shared tips and advice.
The following is a shortened version of that conversation, edited for length and clarity.
10 Questions with Erin Lowry from Broke Millennial
1. Why is it important for people to be willing to talk to other people about money, even when it is uncomfortable?
You can do all the right things to build your financial home, but if you can’t communicate effectively, if you can’t set healthy boundaries, and if you don’t know how to engage in these difficult financial conversations, the foundation will slowly start to crumble. that’s your financial house. It helps if we learn to navigate awkward money conversations, because they will continue to happen throughout our lives.
2. Why do you think it is so taboo to talk about money?
Judgment. I really think that’s the word that sums it up. We are often quite comfortable talking about money with strangers. I have had many, prior to the pandemic, funny conversations on the plane with people about their financial lives, especially once they find out what I do. And there is no risk there. I’ll probably never see them again, so people get really vulnerable and open. On the other hand, I have had friends and family who are not so willing to be open because there is this feeling of, “Oh, are they going to judge me?”
3. What should you do if you want to have a money talk with someone but are very hesitant?
It depends on who the person is and why you are trying to start the conversation. There is a big difference when you and your partner get really serious and are about to move in together. So it is a must to have the financial conversation.
But every now and then I get messages like, “My best friend is pretty bad with money and I want to have a conversation with her about how to be better.” Well listen, if she doesn’t come to you, if you don’t ask, at the end of the day, it’s not necessarily your business to offer guidance and advice.
You really need to allow this to be a very collaborative conversation. Maybe you share something about your own success and that can open the door for them to ask you questions to start more conversation. But sometimes, it’s a “none of your business” situation and if you push the boundaries, people will also feel uncomfortable.
4. How do you know when you are in the right place in your relationship to start talking about finances?
While I would love for everyone on the first date to feel very comfortable figuring it all out, that’s not realistic. What you can do is begin to realize the contextual clues that are given to you along the way. This includes comments that are made, ideas about how much they should spend on dates, trips, or gifts, where that person lives, and what type of car they drive. All of these are giving you cues about how they value things, how they spend their money, and how much they are earning or potentially how much debt they are in.
Beyond that basic level, you should begin to be completely transparent with each other about money at the point where you look at that person and think, “I could spend the rest of my life with you.” When you realize it’s that level of seriousness, you need to have a thorough conversation. That means sharing all the information: wages, credit scores, history of relationships with money, debt loads, investments, absolutely everything. It doesn’t have to all happen in one conversation. It can be a conversation evolving over time.
The other thing I really want you to know about your partner is their triggers when it comes to spending money: what makes them feel uncomfortable, what makes them want to spend, what is their emotional relationship with money, and what they grew up on. Not only what was your socioeconomic background, but how money was talked about and treated in your family, because that will eventually appear in the dynamics of your relationship.
5. Should you wait to get married when you are both in debt?
No, not necessarily. My husband had student loans worth more than $ 50,000 when we got married. You must understand the type of debt you are and the laws of the state in which you are getting married.
I am a huge advocate for the prenup myself, so I think it is very important to consider going through the prenuptial agreement process. We really need to rethink how we think of prenuptial agreements and think of it more like marriage insurance.
A lot of times when I say the word, people go off like, “Oh, you don’t love or trust your spouse.” No, that’s not true. Everyone who gets married has a prenuptial agreement. They are the default laws of your state. If you create your own prenup, you are basically creating a slightly different system that you think would be a fair and equitable division of assets or any debt.
All that said, if you have debt, based on state laws and when the debt was created, you are not necessarily liable for your spouse’s debt. I think if you are going to wait, it could be a decade or more before you can get married if you are waiting for someone to be debt free.
And the other thing is, I don’t think debt is a red flag for a relationship. What is a red flag is how debt is handled today. If there’s credit card debt from five years ago, maybe there was a medical emergency, maybe something happened, or maybe you just weren’t good with money at that stage in your life. But now they have a plan and they are paying off. If, instead, there is a continuous cycle of debt creation, that is a red flag.
6. What advice would you give on how to commit to a romantic relationship before things lead to a bigger money fight?
One of my favorite tips from an expert when I was writing “Broke Millennial Talks Money” was that it’s okay to let one person take the win sometimes. Let’s say you and your husband want to buy a sofa. You want to spend $ 3,000 and he wants to spend $ 1,000. Well, $ 2,000 would be the compromise, meet in the middle. Instead, it could be that you can spend the $ 3,000 on the couch and then at another time, he’ll take the win in a money conversation.
The other thing too, when you’re getting into a fight over money, especially with the purchases you want to make, is getting back to the original goals you’ve set for yourself. And if you haven’t established either as a couple, take a minute to do so.
Develop solid money goals by making them SMART goals.
Your goals are the north star of your entire financial plan. Whenever there is a big debate about how you are going to spend the money, you have to see how this is going to have a ripple effect on everything else you want to achieve that can help solve the problem.
7. Do you have any advice for people on how to navigate cultural norms when discussing money with the family?
I think it’s really critical that we start having conversations early on about what the expectation is, especially if you live in America and are married to someone who has a different cultural expectation about how to handle elderly parents or a dependent sibling. or a sick relative.
Also, you should talk to your parents. You should ask them from the beginning what they want. For some parents, it will be obvious that they expect to live with you in their later years if that is your cultural norm. You probably have an idea what the expectation is, but it’s still nice to have a chat about it.
For others, your parents may tell you not to worry about it. Just because they tell you that doesn’t mean you don’t worry about it. I think a really easy way to turn the conversation around is to ask how they view their retirement. However, over time, it should start to turn into a more real conversation about finances.
8. How do you recover from a fight with someone over money?
I think that depends on how necessary, and this is going to sound a bit harsh, to recover. What one of the financial therapists said in the book, related to friendship dynamics, is that not everyone is a lifelong friend. I think one important thing to keep in mind is that there are friends who will be close friends with you only throughout the seasons of your life. That does not mean that every time there is some difficulty or conflict, say, “I’m out!” But it is important to keep it in mind.
9. How do you defend yourself when you and a friend have different values when it comes to spending money but want to do things together?
Provide an explanation. It really helps provide context for why you keep saying no or keep rejecting. Now, just because you have different values does not give you the right to underestimate their values.
Let’s use an example of going out to lunch. The bottomless brunch is going to cost like $ 50 and you don’t want to spend that much. You can say, “I really want to spend time with you, but I’ll be honest, I don’t want to pay unlimited money for brunch right now because I’m trying to [insert thing here]. How about we grab a bagel and go for a walk in the park? Or how about you come over and I fix a brunch for me? “Provide some kind of workaround for the fact that you are saying no.
This list of 100 free things to do can help you find an activity to do together that won’t cost money.
Now remember, they are free to do whatever it is that they initially planned to do. Just because it’s being removed from the equation doesn’t mean they have to adjust plans. However, if you provide that alternative, you may be able to plan for another time.
Another thing you can do is join later. I really love this for birthday dinners and to split the bill. You can join for dessert afterwards or for a drink afterwards. All that part that will cost the most money will be lost. Just tell your friend that you are going to do that ahead of time.
10. Do you think this experience of living the pandemic will help people feel more comfortable talking about money?
I really hope so. I feel like we’ve certainly had an unprecedented experience, and unlike previous recessions, most people didn’t have any level of personal guilt for what happened to them.
You could have had your financial house in perfect shape. You could have had six to nine months, even a year of emergency savings, but if you worked in an industry that was completely shut down during the pandemic, that’s not up to you.
I think hopefully people will feel a little more comfortable having conversations about getting into credit card debt or being behind on bills or having their credit score hit because it really wasn’t their fault in many ways. So that could give us the flexibility to have less judgment involved in some of these financial conversations.
Nicole Dow is a Senior Writer at The Penny Hoarder.