Money is a highly emotionally charged topic. In today’s society, many attach their self-worth to their net worth and this is the crux of the majority of problems. There are two intertwined attitudes about money that we have to address in working towards separating self-worth and net worth. The first is that it is taboo to talk about money and the second is that personal finance is scary, boring and complex.
The conventional thinking is that you should not talk about your financial troubles. It is best to maintain your status quo the best you can. It is considered bad taste to flaunt your wealth either by being flashy and ostentatious. We are expected to fit in and not rock the boat. Now there is something to be said for when, where and to whom we have discussions about money. I do think it’s uncouth to talk about your personal finances in a social setting, at dinner with friends, out for drinks and the like. No good can come of disclosing how much you earn and spend and other details of your finances to a friend unless that friend is also your financial advisor and even then there is a time and a place to have that discussion.
It is not taboo or in bad taste to discuss your financial status with members of your family. It is imperative that members of the family address financial issues together. Having the open money discussions should be an imperative in every household. The core members should be all be involved. All adult members of the family should have regular conservations about their financial standing. Children should also be involved. It’s not necessary to divulge every detail of the household finances to a child. Children should be made to understand the basics of money. They should also be taught how to value the things they have, this is especially important in today’s environment when children have greater access and availability of material goods. Essentially, with children, we want to make them aware of how the family earns money and how to effectively use this money.
There are many ways to teach children about money without giving them all the details of your financial situation. For example, it’s a good idea to get children involved in the buying process of household items. The pros and cons of buying one brand over another should be discussed. Parents need to take the time to explain the difference in price and quality and why they would choose one brand over another. This gives a child a dynamic understanding of the decision making process as well as it exposes them to the concept of budgeting and wise spending. Parents will know the temperament of their child and will have to decide when and on what items they will consult their kids.
Financial literacy has to be a family’s top priority. It is important for the adults in the family to have a basic grasp of their finances. It is also very helpful to have a good financial advisor, someone who can teach and help you grow your finances along the way. While we want to get away from the idea that it is taboo to talk about money, I just want to be clear and say it IS taboo to talk to acquaintances and random strangers about your finances. It should also be taboo to take financial advice from random strangers and friends who have no prior experience or knowledge of the field.
As a finance professor and financial consultant, I understand the resistance that people have about learning about finance. I notice when the eyes glaze over when people hear the word finance. It is my job to make the topic relevant and meaningful to both my students and clients or I will lose them. On both fronts, I am glad to say I am making great progress. Over the years the delivery of the content of financial courses has been tweaked so that students can relate and they become more interested. The improvement is reflected in their grades. With my clients I see the result on their bank balances. The majority of students and clients who started off thinking finance was too complex and beyond their grasp have been able to master the basics.
When we take the time to talk to the right people about our finances and when we put aside our preconceived notions about the complexity of finance we may be very surprised to realize that it is we are all capable of effectively managing our own finances. In the process we will come to understand the true role money plays in our lives, it is a tool. It is just a tool. It is NOT a reflection of who we are. In the long run when we demystify the process of managing our money we can break free from letting it control us.
Today go brave and make that appoint to see a financial advisor, buy that book on finance, take that workshop on personal finance, have the money talk with your kids, read them a fun story where kids are saving, any one or all of these suggestions will get you closer to financial success.