How to have “The Talk” about money

Money can trigger all sorts of problems between friends, family members, roommates, and romantic partners. Check-splitting, vacation planning, budgeting, dealing with debt, saving for goals, paying for education, or throwing a party can trigger unexpected and painful conflict. And that’s why it’s smart to talk about money before situations develop.

What’s the point of having a money talk? 

Money talks can be big, as in, “How much should we be saving for retirement, and how much can we spend on a home?” Or they can be small: “Separate checks, or should we just split it down the middle?”

Big or small, a money talk helps you avoid conflict and strengthen relationships. You gain:

• Trust and transparency. When you talk about money, you’re trusting people with pretty personal stuff. And that they’ll consider how their decisions affect you, and vice-versa. 

• Financial planning and goal setting. When you make lifelong plans with a spouse or partner, it pays to be on the same page. Or to decide what to compromise on. This improves your odds of personal and financial success.

• Preventing financial problems. Setting a budget together helps prevent overspending and overwhelming debt. Circle back regularly to make sure everyone’s holding up their end and to make adjustments if needed.

Tactics for effective money conversations

Old TV shows often had scenes in which someone waited until their spouse, sibling, or boss was busy and distracted. And then they’d ask for something while hoping to get an absent-minded “yes.” That’s exactly how NOT to have a money conversation.

• Choose the right time and place. This conversation shouldn’t be hurried or take place when either person is in a bad mood. You also don’t want to be interrupted by kids or work. Maybe meet for lunch, take a walk, or have a cup of coffee. 

• Be honest and open (as needed). Don’t lie, but don’t go overboard with details, either. If you’re chatting with a friend about a baby shower you’re planning together, just say what you can afford to spend. You don’t have to reveal your salary, how much you pay for gluten-free food, or what your kid’s therapist charges.

• Be an active listener. That means paying attention to what other people say and then repeating it back in your own words. It tells them you’re invested, you care, and you’re trying to understand what they say. Don’t start arguing with them in your head before they’ve even finished speaking.

• Use clear and simple language. Money can be pretty basic. You’re comfortable (or not) spending X amount on this item for whatever reason. As in, “Things are tight this month. I can’t do Chez Splurge for dinner, but I’d love to meet for lunch at Budget Bistro.”

• Hold regular check-ins. With your family or partner, the money talk is ongoing. After setting a budget, evaluate how you each handled it. Discuss your challenges. Make changes if necessary. 

How to start the conversation

It can be difficult to bring up (gulp) money, especially when something is bothering you or you’re worried about putting your private stuff out there. It can help to do some preparation first and open the discussion with confidence.

• Identify the purpose. What do you hope to accomplish? More equity in how you split expenses? Reach a long-term goal together? Figure out how to pay off debt? Be on the same financial page and avoid arguments? Get support for your efforts? If you’ve just moved in with a romantic partner, for instance, your purpose might be to decide together who pays which living expenses, and if you’ll set up a joint house account to pay them.

• Prepare yourself. Have any needed information at hand. If you’re going to ask your partner to contribute more to the household costs, be prepared to show what they are and how much you’ve been paying. Practice a nice but firm tone of voice.

• Start the discussion. For smaller topics such as, should we split the check, you can just bring it up when it makes sense (like, before anyone orders food). For bigger things, initiation might mean setting a time and place, and letting the other person know the topic. This way, no one feels ambushed, and the other person can also prepare.

How to talk to your spouse about money

Talking to a spouse or life partner about money is different because you’re planning and sharing a future together. You might want to make this time a regular date and tie it to something you both enjoy, like a favorite treat or activity.

Discuss respectfully and make sure you both agree on the major things like retirement savings, buying a home or other big-ticket purchase, planning vacations, and dividing household costs. 

Everything’s on the table. Be honest about your earnings, your debt, your spending, and your credit score. Work together to improve if necessary.

How to talk to your kids about money

You are your child’s first money coach! Start simply by giving kids an allowance and helping them plan for special purchases they want, like a much-desired toy. Teach them that you also have costs like food and housing and can’t always buy everything that you (or they) want.

Lead by example. Let them see your budget and encourage them to ask questions. Praise them for cost-saving ideas and try to put some into action (skipping baths or vegetables is not an option). Help them start their lemonade stand or dog-washing business. Open a savings account or app with them and celebrate together as their balances grow. 

How to talk to your college student about money

It’s easy for college students to make money mistakes if they’re unprepared. Credit cards materialize whether they can afford them or not. Student loan debt can be easy to ignore until it’s time to pay it back. 

Make sure your student understands how loan interest compounds and can increase their balances. Tell them the importance of keeping student loan amounts lower by borrowing less or perhaps paying them down by working during school. Show them how credit reporting works, how it affects borrowing costs and how to earn a good credit rating.

Help your students set a budget for their college years and avoid developing an overspending habit that may be hard to break.

How to talk to your parents about money

Your parents have been managing their own finances for years, possibly longer than you’ve been alive. So be careful and respectful if you have concerns about how they’re handing their money. 

If they express frustration with their bank, their creditors, or their systems, gently offer to lend a hand. They might just need assistance establishing autopay or email reminders. Or you might need to help them track down a payment. If it comes up often, you can offer to take a more active role, and they might welcome it. 

If your parents are receptive, you may want to go further. For example, discuss establishing a power of attorney to take effect if they get sick and can’t pay their bills for a while.