Why talking about money is so important
If you find it difficult to talk about money, you’re not alone.
A 2019 study found that people in the UK find it easier to discuss mental health than to talk about money. A quarter of respondents said that a conversation about personal finances was a no go as it makes them feel ‘anxious’ and ‘nervous’.
The research found that more than half of those questioned feared they would be judged if they were to open up to someone about personal issues, financial or otherwise.
So, for many people, money is considered a taboo subject. Whether it’s the state of your current account, the fact you don’t have any life insurance, or the size of your debts, you may find it hard to talk about your finances.
However, talking about money can have huge benefits, both in terms of your relationships and your financial health. Read on to find out why talking about money is so important.
Do you suffer from ‘personal financial paralysis’?
Research from Freedom Finance has found that nearly half (45%) of adults across the UK feel that the process of making personal finance decisions makes them overwhelmed and anxious.
As a result, more than a third (38%) of people delay or fail to make important financial decisions. Some experts have termed this ‘personal finance paralysis’ - the fear of making a bad decision where a decision is delayed or not made at all.
Personal finance paralysis can have a significant impact on your financial health. For example, the decision to put off switching to a better mortgage rate, or to consolidate a credit card or personal loan, costs UK consumers an eye-watering £18.7 billion per year.
Talking about money can help you to make informed decisions. Whether this is consulting a financial adviser, speaking to someone in your local bank branch, or even chatting to a friend or family member, taking advice can help you overcome this paralysis.
Don’t be afraid to seek advice when you need it as it could improve your financial security in the short, medium and long term. For example, if you want to arrange some life insurance or critical illness protection, but you’re not sure where to start, get in touch with us.
Talking about money is great for your relationship
A study by M&S Bank has revealed that only 17% of people in a relationship regularly talk about money with their partner. More than one in 10 are reluctant to talk about their debts, do not share how much they earn, or know details of their partner’s wages.
Psychologist Emma Kenny says: “The findings show that money can be a taboo subject in some relationships. However, it’s healthy for couples to discuss their finances and it’s important that they engage in open and honest conversations about financial goals and ambitions from the start.
If you’re finding it hard to talk to your other half about financial issues, here are three tips:
1. Schedule a conversation
The charity Relate suggest that you treat a conversation about money ‘like a business meeting’. They recommend approaching your finances as a practical matter and even scheduling a specific time for a conversation about money. A ‘financial date night’ can keep each of you updated about your financial situation and, importantly, how you feel about it.
Discussing matters regularly can prevent arguments, and it helps you to be open and transparent with one another.
2. Work together
There can be huge benefits to working together as a couple. For example, if one of you is the main earner in the household, valuable tax advantages and opportunities are often missed. One of you may have an unused income tax allowance whilst the other is being taxed at a higher than necessary rate.
Working together can also help you to draw pensions tax-efficiently, and to extract profits from a family business without paying more tax than you need to.
Many experts say that collaboration is more important than ‘joint everything’.
Some couples pool their income and expenditure and use joint accounts for their banking and saving. Others keep separate accounts, and only come together when they are saving for a joint expense. Perhaps you have your own separate bank accounts but have a joint account to pay household bills?
It’s important for you to find an arrangement that works for you both, remembering that it’s collaboration that’s key.
3. Consider your partner’s relationship with money
Everyone has a different relationship with money. This is frequently linked to the way you dealt with money in your childhood, or the ways in which your parents tackled financial issues.
Allison Kade, a millennial money expert, told Business Insider: “A great deal of our opinions and attitudes about money come from our family.
“So, a great way to start understanding where your significant other is coming from is to understand his or her upbringing — and you can start with conversations about your childhoods.”
As far as your partner is concerned, there may be deep-seated issues which are the cause of their reluctance to discuss money. Only by exploring their relationship to finances, and being sensitive to it, will you be able to move forward together.
5 reasons why you should talk about money
We’ve already looked at how talking about money can help you to get your finances in better shape. We’ve also looked at how dealing with household finances jointly, and having conversations about finances, can be healthy for your relationship.
Here are give more reasons why talking about money is so important.
1. You’ll get another perspective
When it comes to money, sometimes you can’t see the wood for the trees. If you keep your financial worries to yourself, you’ll only see things from your point of view. By sharing – either with your partner, a friend or a professional – you’ll benefit from a fresh viewpoint.
2. Share your own experiences
Sometimes, talking about money means you’ll be the one giving advice rather than the one receiving it. Talking about money with your friends, children or grandchildren can help you to understand the challenges they face. It can also help them to hear about your own experiences, especially if you can provide some useful insight and advice.
3. Reduce your stress level
According to a 2019 Perkbox study, money is the biggest cause of stress for employed adults. Whether you’re concerned about what would happen if your income were to stop, or whether you’ll outlive your pension, financial stress is a common cause of worry.
Talking about money with your partner, a friend, or a professional can help you to alleviate your stress. They may also be able to provide you with some tips that will have a positive effect on your situation.
4. Share your wisdom and knowledge
Over the years, you’ve probably picked up some useful financial tips. So, it can be beneficial to share your wisdom with others.
If you have some useful money advice, imparting it to others could have a huge benefit on their financial situation and help them to reach their goals. It can be as simple as a good deal you have got on a financial product, or wider advice about savings, protection, pensions or investing.
Talking about ideas also give you the opportunity to debate different options, and maybe you’ll pick up something new from others too.
5.Talking can help you to focus on long-term issues
When we talk about money, it’s often about short-term issues such as who’s paying the plumber or how much you need to put aside for the supermarket bill this week.
Opening up about money gives you the opportunity to start thinking further ahead. What would you like to achieve in ten- or 20-years’ time? What are your long-term financial goals? Do you want to pay off your mortgage as quickly as you can, or do you want to help your children through university?
By thinking about your long-term goals, you can create a plan that enables you to take steps towards them.
Talk to us about your protection and life insurance
Whatever your financial goals, planning for unexpected bumps along the way is crucial. So, it’s important to make sure you have the right protection in place so you and your family will be financially secure if the very worst should happen.
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