Why you need to talk about money openly

Money is important, but most of us are uncomfortable talking about it. And today I want to discuss why you need to talk about money openly. honestly and unapologetically.

Double faced social norms around money

Have there been occasions when you found yourself thinking of the bill while having a meal, not really able to enjoy the food or the company?

Go back to your college days. Can you remember the number of times you wished your friends would go dutch rather than one person bearing all the expenses? Because someday it will be your turn.

And the number of times your decision to go out with a group of colleagues depended upon how inclined they were to share expenses? Because you could not bring yourself to voice your thoughts. How could you talk about money!

Some statements people make about money:

• Talking about money is impolite
• Only the classless people talk about money
• Money is not everything
• It’s immoral to give money undue importance

Some other statements that same people make about money:

• Don’t you know you must always keep track of the money you are spending?
• How could you take more loan than your ability to repay the loan?
• You haven’t started saving for your retirement even though you have been working for 4 years?

Wow, on one hand you make talking about money taboo, and on the other, you expect everyone to know the basic tenets of handling personal finance.

And this trait seems universal

Two weeks back, I started a poll on LinkedIn asking people whether they were taught about handling money by their parents. 

It was in the spur of a moment that I did this because I had been pissed off by some conversation with a family member. That stray incident led me to think about how hush-hush money talk is in our culture. 

To be honest, when I said our culture, I meant Indian culture because I hoped that western cultures, especially American, must be more open-minded about talking about money. 

I couldn’t be more wrong.

I was shocked to discover that Americans are equally loath to talk about money with their partners, kids, family members or friends.

And I was relieved that we Indians are not disadvantaged when it comes to entrepreneurship because we are not trained in handling money since childhood. 

Grounding in personal finance is essential to success

Because it’s a fact that the taboo around talking about money in the family prevents youngsters from developing personal finance skills, which hampers their professional and personal growth later. If we want to bring up successful entrepreneurs, we need to start building the foundation when they are young. And why just entrepreneurs, everybody should be financially savvy so that they lead a happy and fulfilling life. 

In a recent survey of 630+ Indian adults, 9 out of 10 adults said that their financial status impacts their well-being. And undoubtedly, the pandemic has worsened the economic well being at every level.

The irony is that you can talk about the world economy or the national economy to death, but talking about personal finance is frowned upon. It is considered unimportant and hence not worth the time.

But we all know nothing could be further from the truth. 

Right from my college days, when I had to make do with second hand novels because that was what I could afford with my monthly allowance, I dreamed of the time when I could buy as many books as I wanted. Little did I know that when I started earning, there would be million small things that would need taking care of, and once again buying books will have to take a backseat. It took me a couple of years to realise that if I wanted to be happy, I needed to spend on the things that were not essential to my survival but necessary to nourish my soul. Once I started allocating a monthly or quarterly budget to things I wanted to do for fun, I was in a much better place emotionally. 

And I wished I knew about allocating funds since I started handling money. This need was felt even more acutely when I started my own freelance business and struggled with bookkeeping, banking and maintaining cash flow.

The result of the taboo around talking money is that we have youngsters who start handling money very late in life, and hence do not know how to do it. Transitioning to college is a life-changing experience for most people. Add to that the misery of handling finances and you have a sure shot concoction of stress, failure and misery. But it need not be that way.

How talking about money openly will help

I do not consider a student really graduated from college if they have not experienced at least one feast and famine cycle every quarter. That’s their sign of coming-of-age.

If we start talking about money within the family, especially with our kids, here is how it will help them become personal finance whiz in the future. And who knows, they might become successful entrepreneurs and business owners later on.

• It helps in estimating how every action impacts their finance.
• They are honest about their financial status.
• They are unapologetic about their finances, which helps in boosting morale and maintaining mental health.

And who knows, they might even become successful entrepreneurs and business owners later on. Because a grounding in personal finance sets them up for better success rate. Here are some of the way a money-savvy entrepreneur makes difference to their business:

• They are able to estimate both income and expenditure so they know when to go for cost-cutting measures and when they have the bandwidth to expand. Basically they know when they can order French fries and coke with Jumbo burger and when to make do with cheese sandwich.
• A money savvy entrepreneur can weigh the pros and cons of all choices and make informed decisions.
• They always have alternatives ready in case of need. 
• They are creative in thinking of ways to build new income streams. It is an open secret that you cannot create wealth by saving, you must have bountiful income sources.
• A financial savvy person is able to understand the nitty-gritties like terms of payment, repayment clauses, applicable interest rates, etc.
• Experience with handling money inculcates a financial discipline that extends to the work life. Whether they are bootstrapped or funded, they need to be prudent about their expenditure.
• If they have the right idea, they will not lack opportunities for getting loans but they need to know when to go for credit, and this can come only if they are comfortable about thinking money.

Make your child feel mature and responsible

When you talk to your child about money, you essentially tell them that I think you are mature and responsible enough to handle money. The moment this happens, the child becomes aware of the responsibilities of spending money responsibly. Small little habits like these start developing, which help them go a long way when they have bigger financial management burden:

• Keeping track of every transaction
• Forecasting cash flow
• Regular bank reconciliation
• Better decision making capabilities
• Ability to build good rapport with people who matter
• Effective debt management

Final Thoughts

I hope you are convinced of the need to start talking about money honestly and openly in your family. With kids, you can start with The Four Money Bears by Mac Gardner. No, I haven’t read the book because it’s eBook version in not available and the printed copy is cost-prohibitive for my location. May be I will allocate the funds in near future and get hold of it.