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 might lead to unexpected and painful conflict without clear communication.

That’s why it’s smart to talk about money before potentially tense situations develop. It can be much easier to get on the same page as your loved ones when you talk about money in a calm, honest way.

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. It's important to agree on shared goals and compromises when you decide your financial future with a spouse or partner. This improves your odds of personal and financial success.

• Prevent financial problems. A budget that includes both of you may help avoid overspending and overwhelming debt. A free budgeting app like Achieve MoLO® might help. Circle back regularly to make sure everyone’s holding up their end and to make adjustments if needed.

Tactics for effective money conversations

Effective money conversations happen when everyone involved is focused and committed to talking things through. If you try to chat when someone is distracted, busy, or annoyed, that's exactly how NOT to have a money conversation.

Here are a few tips to make the most of a money talk:

• 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 rather than revealing every aspect of your finances. If you're talking with your life partner about your shared financial goals, however, more detail is generally better.

• Be an active listener. Pay attention to what other people say and then repeat it back in your own words. This shows that 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.

• Take a break when emotions run high. Agree on a time to pick the talk back up, then notice what set you off.

• Skip the blame. Ask what shapes the other person’s money habits rather than assuming, then focus on what you can both change next.

• 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.

• Bring in a neutral third party if you’re stuck. A financial counselor or a money management class you take together could help you find common ground.

How to start the conversation

It might 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 could 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? 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 respectful but firm tone of voice.

• Stick to one or two topics. Pick the most pressing issue for this talk and save the rest for another day to avoid overwhelm.

• 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.

Try one of these friendly openers, or tweak the wording so it sounds like you:

• With a partner. “Could we set aside time this weekend to talk about our money goals for the year?”

• With a roommate. “When's a good time to chat about a fair way to split the utilities and groceries?”

• With a friend. “Before we book the trip, let's agree on a budget that works for both of us.”

• With a parent. “Is there any money task I could take off your plate this month?”

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.

One of you might earn more, or one might love to spend while the other loves to save. You both still get an equal say in big decisions. Sort out which goals you share and which are personal, then revisit how you split costs as life changes.

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

Money questions to ask your partner

If you're not sure where to start, consider these questions you could ask on your next money date:

• Money style. Are you more of a spender or a saver?

• Monthly budget. How much do we want to spend each month, and on what?

• Current debt. What debts do you have right now, and what’s your payoff plan?

• Credit checks. What are your credit score goals?

• Bill split. Should we split bills equally or based on what each of us earns?

• Shared accounts. Do we want a joint account, separate accounts, or a mix of both?

• Savings goals. What are we saving for over the next few years?

• Retirement. How do you picture retirement, and when would you like it to start?

• Big dreams. What’s one big goal you’d love for us to reach together?

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 learn about 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 could 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. Get them into a savings habit early if that's a skill they haven't picked up already.

How to talk to your parents about money

Your parents have been managing their own finances for years, and may have mixed feelings about sharing the details with you. So be careful and respectful if you have concerns about how they handle 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. Suggest a chat about future health care needs or what they want to happen to the assets they leave behind. Early planning could help avoid future financial problems.