Talking About Money With Family and Friends

Talking About Money

Maybe it’s a cultural thing, but here in the United States there is an extreme aversion to talking about money. This phenomena is not just limited to talking with strangers, but even with close friends and family members. I remember growing up and having absolutely no idea how much my parents made, or what the mortgage payment or car payments were. Talking about money was simply not an appropriate topic of conversation between parents and their kids. The United States has one of (if not) the highest rates of personal bankruptcy among developed nations, and it’s no wonder since kids are growing up without hearing the facts and figures behind some of the most important money topics. There is also a similar aversion to talking about sex education in this country, and we have the highest rates of teen pregnancy in the entire world. So, while correlation doesn’t necessarily equal causation, the similarity is striking and in both of these cases – more information sharing is always better.

Why aren’t we talking about money?

Prior to legislation being passed, many companies forbid their employees from sharing their compensation details with colleagues. I imagine this was done to prevent the underpaid workers from making a fuss and demanding a raise, thereby saving the company money. Thinking back to my own upbringing, money was never discussed and I also remember it being a taboo topic with my grandparents as well. On that later point, it made things much more difficult when I was tapped at the end stage of life by my grandparents to take over their medical and financial decisions as their failing health necessitated… and I had to start at square one by acquainting myself with their financial situation.

There was no personal finance course offering when I was in high school; a sorely needed resource to teach valuable life skills to financially naive teenagers. This attitude toward not talking about money has likely had very negative results for many people. For instance, A Purple Life Blog has a great post about what happened when she shared her salary with coworkers. Being open about salary can actually increase the pay received by others, or yourself, who are performing the same (or even higher-level work!). It literally pays to talk about money!

What should we be talking about?

Everything! Why shouldn’t we talk about salaries, rents, budgets, vacation expenses, etc.? I’ll start it off, I have two jobs and make $82,000 per year at my full-time job and about $8,000 per year at my side gig. This puts me right about at the median income for Washington DC. My rent is $1,500 per month. My first job out of college was tutoring part-time at a local college and it paid $15 per hour. This was the biggest shock after spending a fortune to get my degree; that I was underemployed and wasn’t sure if I would ever find a “career” that actually paid the bills.

I didn’t land a full-time job until two years after I graduated and it paid only $45,000 and required me to move to Washington, DC. The cost of living in Washington, DC is absolutely atrocious and I was actually living in a deficit my first year in DC due to the high cost of living and low relative entry-level salary. During this time I thought I needed grad school to further my career so I spent another fortune on that. Today, with all the compounded interest, I have a six-figure student loan debt – nearly $200,000. Was all that debt worth it? Absolutely not and I certainly wouldn’t do it again if I could start all over.

If me sharing these numbers helps just one person make better decisions for themselves, then it is worth it. Imagine if everyone did this and was more open with their finances so that others could learn from them and make better decisions! We could slowly, but surely, grow the financial intelligence of an entire country.

How should you start talking about money?

How much do you have saved for retirement?

A great start is talking to your parents or kids about retirement saving. It’s something that everyone should be saving for and asking your parents about their retirement saving strategy, contributions, and balances will help give you a frame of reference for your own retirement planning. Then share where you’re at with your own retirement planning. This exchange of information could open the door to further discussion of salaries, mortgage/rent costs, and other money topics that you could both learn something from each other. Families certainly need to talk more about money as it makes estate planning so much easier. In the unfortunate, but inevitable, situation of the death of a family member, it helps tremendously if everyone already knows what their wishes were for the assets they left behind and that there are no surprises during such an emotional time.

How much is your rent?

Another idea is to ask your friends about their rent. Everyone has to pay rent or a mortgage and showing genuine interest about your friends’ housing costs can help you make more informed decisions about your own housing situation. Start by sharing what you’re paying now and that you want to know if you’re spending the right amount for where you’re at. The discussion may lead one of you to realize you could save money by moving to a different part of town or that you have a really great deal where you’re at. That’s what happened to me. When discussing rent with work colleagues, they discovered that despite me living in one of the most expensive parts of DC, that there are ways to score an incredible deal on rent if you know where to look! I’ve helped several people get into apartments at below market rates using the same strategies I used and this never would have happened if we didn’t talk about money!

How much should I be earning in my job?

I have served as a mentor for up and coming Economics students at my alma mater and will often bring up the topic of salary with them when discussing their expectations after graduation. I wish there was someone who had done the same for me when I was an undergrad as it would have certainly helped to temper my expectations. I remember in my senior year reading an article put out by an organization that surveyed recent Economics grads about their first year salary and it was supposedly a median of $55,000 per year. However, I don’t recall talking to a single Economics graduate from my University that got offers above $50,000.

Talking about job offers, pay rates for promotions, and current salaries can be a great equalizer in the working world and websites like Glassdoor are working hard to bring that information out into the open.

Help do your part by opening the door to discussions about money, you never know who you may help – it could be you!

 

 

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