Openly discussing finances with friends and family is not something that comes naturally to most Australians.
Crippled by fear, lack of financial literacy, embarrassment or an overdeveloped sense of pride, many Australians refrain from discussing what they earn, their financial situation or whether they need help. This reticence, however, could be holding many people back from achieving financial security.
Certified Financial Planner Matt Logan believes there are two crippling issues that hold people back when discussing money: cultural convention and education. To back up his claims, Logan cites a 2012 study conducted by the American Institute of CPAs (AICPA), which found that only 14% of people are comfortable discussing their financial problems.
There is a similar problem here in Australia. It is best reflected when we look at women’s attitudes towards discussing their financial situations.
Women hold a mirror to social convention
A study conducted by Fidelity Investments found that 92 percent of women involved in the study want to learn more about financial planning, and 83 percent want to get more involved in their finances. Unfortunately, 80 percent admitted to restraint from discussing money with family and friends and only 47 percent feel confident when talking about finances with a financial professional.
Vulnerability plays a major role in this reluctance. Accountant and author Melissa Browne writes in the Sydney Morning Herald, “I think the reason there is such an ick factor associated with money is because of the extremes. If you don't have enough money, you're not earning what you think you should be or you have too much debt, there can be enormous shame involved.”
Yet, speaking about finances can have enormous benefits. Huffington Post journalist Jennifer Dziura sums it up best when she says, “Using real numbers allows us to share our accomplishments, as well as to see what other people are up to and set reasonable (or ambitious) goals…Sharing actual numbers allows us to realise that we are perfectly normal. Numbers give context.”
Discussing financial matters with friends and work colleagues also creates transparency in the workforce, prevents wage discrimination, provides strength in negotiation and creates allies. Most importantly it removes the stress of financial burden.
So what holds people back?
The problem at home
Often our partners are our best friends, but when it comes to discussions about home finances, there is a disturbing pattern of avoidance. Money coach Maureen Gilbert says,
“We are dealing with subconscious behaviour, patterns and beliefs around money that most of us have never taken a look at.”
To overcome these problems, Gilbert says that couples should talk about money as early as possible in the relationship, as waiting until after marriage is too late. Issues like debt, spending attitudes, savings and joint finances being addressed early, in order to understand each other’s expectations.
The problem with friends
The same problems that you face with your partner, you face with your friends.
However, friends throw up another conundrum. A survey conducted by Quicklypay.it found that 3 in 4 (75%) of Australians lend money to friends and never get it back, 4% estimate they are owed over $5,000, almost two-thirds (63%) feel "too awkward" to remind people to pay their debt and 1 in 4 (25%) have ended a relationship over unpaid debt.
If we can’t rely on our friends to pay back the money we are owed, how can we have the confidence to tell them about our financial situation?
Australians attitudes towards money
A recent study conducted by BPAY found that of the group that participated in the research, most had a saving mindset and only 1 in 3 would rather enjoy their money than save it.*
So what is the solution?
There are positive outcomes when opening up about finances, so perhaps the etiquette that compels us to hold our tongues should be reconsidered. If so, Australians would gain a sense of freedom over their finances that they once thought out of reach. It would be wise, now we know the benefits, to find someone to talk to and share accomplishments and concerns.
Confidence in discussing financial situations gives context to who we are and what we do to live, drive and survive. The better communicated and educated we are, the less our financial burden will be.
*Based on BPAY Usage and Attitudes Survey, 2014
This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
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