Why Breaking the Taboo on Money Talks Could Help Your Finances

Americans like to share their opinions on all kinds of topics – maybe too much.

Except when it comes to money.

Personal income, wealth, debt and other financial topics remain largely taboo even at a time when more and more people seem willing to open up about their political views, health issues, dating, practices sex and more. And the lack of candid discussions about money might hold some people back.

Yanely Espinal grew up in a Brooklyn family led by immigrant parents from the Dominican Republic. Money was not a topic of discussion around the dinner table.

“No one in my family knew about this stuff,” said Espinal, who became a money influencer and started MissBeHelpful, a money-focused YouTube channel. “We never talked about money and we never had a money class.”

Money is banned in many homes

She spoke at a recent event in Phoenix for young Latinos sponsored by JP Morgan Wealth Management.

Latina financial influencer Yanely Espinal says financial topics just weren't discussed at home when she was growing up.

Another speaker, businessman Xavier Gutierrez, president and CEO of the Arizona Coyotes hockey franchise, urged Latinos to educate themselves and talk more about financial matters. “Have the conversation and share it,” he advised the audience of about 150 people.

But money taboos aren’t just a problem in Latino or non-white households. Americans in general, and women in particular, are reluctant to open up.

A survey of more than 1,200 Americans found they were more comfortable talking about marital issues, mental illness, addiction, race, gender, politics and religion than money. The 2018 study was sponsored by the Capital Group, which manages the giant family of US funds.

Curiously, the people most willing to discuss their finances fell into one of two extremes: either they felt very confident and well-prepared about their finances, or they felt very insecure and unprepared. People in the confident group wanted to share their knowledge, while those who needed it most were motivated to learn more.

Differences by gender, age

The study also found that older adults are willing to have conversations about money with their financial advisors and spouses, while younger adults prefer family members and friends.

“It’s important to break the money taboo and turn money, saving and investing from a source of isolation, stress and anxiety into a more inclusive conversation about how we we can all be more secure in our financial lives, especially in retirement,” the company said.

Although a common stereotype may state that women are more likely than men to discuss sensitive issues with their friends, the Capital Group study did not confirm this when it comes to money matters.

The men and women interviewed were nearly identical in their willingness to discuss marital issues, religion, politics, sexual orientation and family disagreements. But when it came to financial topics such as income, retirement savings and debt, women of all generations were more likely than men to view these topics as a social taboo.

The study also found that millennials and Gen Xers were less likely than baby boomers to consider money topics off-limits, but all three generations were generally less willing to discuss finance than other topics.

Based on its research, the Capital Group suggested several ways to encourage financial conversations that can change behaviors for the better:

One is to start at home by talking with your spouse or significant other as well as parents and children. Another is to seek financial advice from professionals, if available. A third is to learn what you can from your employer if they offer a 401(k) retirement plan or various financial wellness programs. Many employers offer financial resources, but they tend to be underutilized, the study found.

How to start the discussion

George Fraser, a financial advisor who regularly meets with 401(k) plan participants, thinks part of the reason many people don’t like discussing financial topics is that there’s often so much fear, anxiety, embarrassment and other negative connotations. attached to them.

Financial adviser George Fraser believes people are more likely to open up about money-related topics if presented in a hopeful way.

As an example, he noted that many people believe – incorrectly – that they will not receive any social security benefits when they retire, which reflects negative media attention. Consequently, they might feel pressured to accumulate massive personal savings on their own, which might be an unrealistic goal for many.

Instead, he prefers to spin the conversation in a more positive way. In the Social Security example, this could mean that a typical worker can expect to receive close to $400,000 in lifetime benefits, maybe more. This figure is based on average current payments of approximately $1,600 per month spread over 20 years or more (not accounting for any benefit reductions along the way as well as inflation-adjusted benefit increases).

“If you start with a more optimistic approach, they’ll be more engaged,” he said.

Fraser, managing director of Retirement Benefits Group in Scottsdale, argues that it’s more important to help people understand what they have rather than what they lack.

“When you do that, it helps them open up,” he said. “It excites them.”

This ties in with a fourth recommendation from the Capital Group study: try to imagine what your retirement might look like.

According to the company, people who tried to imagine the life they wanted to lead in retirement were more likely to consider saving extra money in a 401(k) account than those who didn’t.

And presumably, they would also be more willing to talk about it.

Contact the reporter at russ.wiles@arizonarepublic.com.

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