How to Have Important Conversations About Money

Written by Nicola Brown

Tuesday, July 7th, 2020

COVID-19 has had a stressful impact on many people, both emotionally and financially. While lifting restrictions will help on the emotional side, on the financial side, there may be a longer road to recovery.

For many of us, this means having important, and sometimes difficult, conversations about money with the people in our lives, whether it's a family member, friend, or landlord.

Here Are 5 Tips for Having Essential Conversations About Money

Tip 1: Choose the Right Time and Place

The right time and place to discuss money is entirely dependent on you and the person or people you're talking to.

For some, a chat over dinner might be suitable. For others, a more formal sit down may be needed. Choose a time and place that will be conducive to everyone paying attention and being in a constructive mood.

If your spouse tends to be tired toward the end of a long day, perhaps the morning is a good choice. If you've got teenagers who don't see the light of day before noon on weekends, the afternoon might be better.

Make sure you have ample time, privacy, quiet and space to dedicate to the conversation. Eliminate distractions to ensure you won't be interrupted or drowned out. If it's by phone, find a comfy spot in case it's a long conversation.

Tip 2: Prepare Some Key Talking Points, Anticipate Questions and Feedback

Being prepared can help you make sure you've covered everything that needs to be discussed. It can also help you manage an emotional situation with a little more calm and confidence. Whatever you do, don't simply launch into a tirade whenever the mood strikes.

Prepare some key talking points (not too many), and keep them specific and constructive.

For example, rather than "discuss change in retirement plans" try "suggest postponing retirement by 1 year to recover X amount lost." This will help your conversation stay focused and help you avoid trying to cover too much ground.

Anticipating feedback and questions is a good way to prepare for emotional reactions ahead of time. Be prepared with constructive responses or suggestions to keep the conversation moving in a productive direction. Plan your response to a range of reactions and emotions including anger, sadness, and even silence.

Mental health has been one of the biggest challenges of the past few months, so give people time to feel their emotions and let them know that those emotions are valid before stepping in to guide the conversation.

Tip 3: Avoid Starting Conversations with Negativity or Criticism

When dealing with important financial matters, it can be an added challenge to kick off the conversation on a positive note. You're not aiming to make light of the situation, but to begin in a hopeful way.

A good example might be: "I really admire how well you've handled the financial difficulties we've been going through since the start of COVID-19."

Establishing a positive and constructive tone for the conversation will help you achieve your aim much better, even if the heart of the conversation is less than rosy.

Tip 4: Share Helpful Resources that Back Up What You're Saying

Avoid the perception of preaching from a high horse by bringing in external references for your comments and suggestions. Emphasize that it's a learning process for you too and that you're all in this together.

Start sentences with "I was reading about a clever post-COVID saving strategy..." or "I've learned a great deal about investment portfolios this week and I think we could make some adjustments...".

Your conversation may involve discussing some drastic and unanticipated changes to a lifestyle you or your loved ones have been used to. Bringing in references that show how it can be possible to live on less and still be happy, or how you can safely dip into your savings without jeopardizing your retirement, will provide some tangible evidence that supports your hopeful outlook.

Tip 5: Suggest Practical Ways Forward Like Making a Financial Plan Together

Conclude your discussion with a plan for what you can do next. Agreeing on the next steps can help everyone perceive the issue as solvable with a visible way forward. This can help reduce feelings of stress or hopelessness.

Example: "Even though we may have to make some sacrifices, I've got a plan for how we can each do our part to get us on our feet again. The better we all work together, the faster we'll be able to move forward. Here's what I suggest..."

With a bit of planning in advance, even the most stressful money conversations can result in positive financial plans in the long run.

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