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Get money out in the open

Posted on 20 November 2018
Get money out in the open

Money and Life
(Financial Planning Association of Australia)

Money talk is one of our biggest taboos in Australia. But if we can't be open about it, how will our kids learn to thrive in the invisible money age? Find out more about the potential benefits of opening up about money for you and your kids.

In two recent surveys[1] on what Aussies prefer not to talk about, money came out on top. Personal finances are the topic most likely to make us squirm, even more so than sex, religion and politics[2]. This is hardly a surprising discovery when was the last time you had a casual discussion about your personal debts, income and how much you spent on that overseas holiday last year? But it's ironic and perhaps even worrying, that in a country where household debt and financial stress are rising, talking about our finances is still off-limits. Instead of opening up, for the benefit of ourselves and others, we're still keeping money matters good and bad under wraps.

Where's the harm in keeping quiet?

Should we start talking about money more? Surely there are good reasons for steering conversations away from troubling things like debt. Sharing salaries and how much we owe on our credit card can make us uncomfortably proud or ashamed, not to mention the feelings we might trigger in others. Being open about money leaves us vulnerable to judgement and introduces the possibility of making others feel envy or pity.

But these risks are likely to be worth the rewards, according to research conducted by ME Bank. In their 2015 survey, they found that getting finances out in the open can make a difference when it comes being less stressed about money. 78% of people who avoid discussing money are stressed about their finances, compared with 35% of those who are comfortable with money talk[3]. The survey also found that being open about money often means you're likely to be more active in managing your finances too[4]. While these findings might tell us that people who feel relaxed about money and in control are going to be more comfortable talking about it, perhaps it's also important to note that bottling up money problems and worries isn'tgoing to help you work out a solution or sleep at night.

At the extreme end of the spectrum, dishonesty about money can lead to serious problems with your partner and other family relationships. The ME Bank survey also notes that being open about finances in a relationship can cut your chances of arguing about money by almost half. 61% of couples who talk money will rarely or never fight about it, compared with only 34% of couples who consider money off-limits as a subject for discussion.

Money matters for a new generation

It seems clear from the ME Bank survey that talking more freely about money could be good for all sorts of things, including happier marriages and relationships. But we should also consider the benefits of changing the script about money for our kids. The Share the Dream report from the Financial Planning Association shows the majority of parents see their kids as more confident with money (69%) and financially literate (57%)[5]than they were as children. But this doesn't stop parents from being concerned about how well equipped their children are to become successful with their money as they reach adulthood. Almost half of parents surveyed (45%) worry their kids won't have the skills they need for financial success in the future[6].

What holds us back from opening up

In spite of this concern, only half of parents had talked money with their kids in the last month[7]. What's perhaps more concerning is that 68% of parents feel some reluctance to talk about money, even though 62% believe their kids are likely to be worse off than they are, financially speaking[8]. Surely it's worth overcoming this continuing view of money as a taboo topic if kids are going to stand a chance of being financially secure and independent. It's hard for them to learn positive money lessons if parents are hesitant to share their knowledge.

Get talking about invisible money

For parents who are taking on the task of money education for their kids, their number one lesson is on how to spend and save (52%), followed by how to earn money (43%)[9]. What they're not talking about much is the important subject of invisible money. Less than one in five parents have talked about online shopping (19%) or in-game app purchases (13%) in the past six months and the numbers discussing things like Afterpay are tiny a mere 5%[10].

While around one in 10 parents[11]might feel their own knowledge of money matters like these is stopping them from being open, far more of them are well aware that digital money could be a serious challenge for their kids financial wellbeing. Two thirds of parents agree digital money is making it harder for children to grasp the value of real money[12].

Getting the balance right

Whether it's traditional money issues that parents are addressing with kids, or the more modern ones like tap and go payments and bitcoin, it's important to make it a positive conversation. No-one wants to pass on financial worries as part of the lesson, so try to keep to yourself any stress or concern about your own finances. You can be honest about your experiences and still help kids to understand that money can be a positive thing in their lives if they get into good habits early and learn to manage cash flow when they're earning and paying their own way.

Planning your next money conversation with your kids? There are some great tips and activities in our free eBook: How to talk money with children

[1] Finder media release, Talking about money off limits for Aussies (but sex and politics OK), 17 February 2016,https://www.finder.com.au/press-release-talking-about-money

[2] ME Bank, Sex and money are our top taboo subjects, 4 November 2015,https://www.mebank.com.au/news/sex-and-money-are-our-top-taboo-subjects/?r404=1

[3] ME Bank, Sex and money are our top taboo subjects, 4 November 2015 "The more you talk openly about your finances with others, the less worried you are about them. Of respondents who said they don't like talking about their finances, 78% were worried about their finances compared to 35% of those who do like talking about their finances."https://www.mebank.com.au/news/sex-and-money-are-our-top-taboo-subjects/?r404=1

[4] ME Bank, Sex and money are our top taboo subjects, 4 November 2015, "Of respondents who said they like talking about their finances, 80% said they often/always actively manage their money compared to 69% of those who don't like talking about their finances."https://www.mebank.com.au/news/sex-and-money-are-our-top-taboo-subjects/?r404=1

[5] Financial Planning Association, Share the Dream report, page 5

[6] Financial Planning Association, Share the Dream report, page 9

[7] Financial Planning Association, Share the Dream report, page 6

[8] Financial Planning Association, Share the Dream report, page 5

[9] Financial Planning Association, Share the Dream report, page 6

[10] Financial Planning Association, Share the Dream report, page 6

[11] Financial Planning Association, Share the Dream report, page 10

[12] Financial Planning Association, Share the Dream report, page 5

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