Editor's note: This is part one of a four-part series on financial conversations. Read the second, third and fourth articles in the series.
For many people, talking about money can be uncomfortable. Even "fun" events like receiving an inheritance or a salary raise might be taboo. Add in emotional topics like death or divorce, and financial conversations can be downright nerve-wracking.
You might think it's more polite or easier to skip money talks entirely—which most people do.
However, despite being a sensitive topic, experts say avoiding important financial conversations can lead to unintended consequences, from missing out on financial earnings to causing strained relationships.
"Whether it's with your spouse, aging parents or children, it's important to be honest and transparent," said Victoria Ungashick, private wealth executive at BOK Financial®. "Money is integral to our wellness and security, and we want to avoid surprises or misunderstandings.”
“Ideally, the people we care about should be able to make informed decisions that are right for them, and they can't do that if we don't talk.”- Victoria Ungashick, private wealth executive at BOK Financial
Money conversations become especially important when you or a loved one have financial challenges like debt or financial infidelity. Molly Kerr, senior investment manager at BOK Financial, said disclosing money issues is essential to fixing these issues. "If you talk about money, it can be emotional and messy, but there's always a path forward," she said. “If you hide it, it's only going to fester and grow—and that will impact the relationship."
In fact, the most awkward financial discussions are often the most essential, according to Kerr and Ungashick. They recommend making the following conversations a priority:
- Financial goals and debt with your potential spouse.
- Retirement goals and financial plans with your spouse.
- Estate plans and long-term care costs with aging parents.
- Succession planning with business partners.
- College savings with children (especially if you’re not saving enough).
- Inheritance with beneficiaries.
- Salary negotiations with hiring managers.
Six tips for talking about money
If you’ve never broached the subject, it can make you feel vulnerable to start money discussions. Experts said it gets easier with practice and offered the following tips:
- Be transparent. Being honest about money can be scary, especially if you feel shame about your financial status. In particular, Ungashick stresses the importance of being truthful with your financial advisor. “Just like lying to your doctor, withholding information from your financial advisor or tax advisor can have serious consequences," she said.
- Remove judgment. Money conversations are hard, and some people might feel fear or embarrassment. When possible, keep your approach gentle and kind.
- Stick to the facts. Remove emotion from the conversation as much as possible. "Treat these conversations as a business or work meeting, and stay as calm and neutral as possible," suggested Kerr.
- Remember, it's a process. "Set time on the calendar for the discussion," said Kerr. "With your spouse, this could be a budgeting meeting or an annual financial plan update with an advisor. With your kids, set time aside to discuss allowance and savings."
- Get your paperwork in order. Whether it's a will, a prenup or a financial plan, simply getting the details “on paper” and setting up your documents can go a long way toward creating clarity; these steps also provide opportunities to talk about money with loved ones.
- Use a third party. "In whatever stage of life you're in, find a resource you trust to help guide these conversations, especially if you get stuck. It could be a mentor, clergyperson, lawyer, tax accountant or financial advisor," suggested Kerr.
We don't like to think about when one of us passes away or if we get divorced, said Ungashick. "These conversations and documents—wills, prenuptial agreements, trusts—allow you to state your wishes when you are less emotional. They can help make a difficult time easier when or if the worst happens."
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