Updated on 09.05.14

Rule #5: Talk About Money (and Be Honest).

Trent Hamm

14 money rulesA reader asked me if I could break down my ideas into a handful of principles. After some careful thought, I came up with a list of fourteen basic “rules” that summarize my money and life philosophy. I’ll be presenting these as a weekly series.

It’s late April 2006. I’ve finally realized how bad our financial situation really is. Finally, after weeks of stewing, I’ve decided to talk to my wife about it. I’m sitting at the kitchen table with some papers, about to tell her about the situation and that we need to make some changes. I’m scared to death.

She calls. She’s on her way home from work and has just picked up our son. I’m thinking of ways to avoid this talk. So I do. I stack up the papers and work on supper, deciding to talk about it after our son is down for the night.

We have a strangely tense dinner. I’m tense. My wife is wondering what’s going on (for good reason). She puts our son to bed and I sweat it again, not wanting to talk to her.

But I finally bite the bullet.

And it’s easy. Much easier than I thought. It was calm and rational and we came to a lot of agreements by the end of the evening. Sure, we were up until after midnight that night and up pretty late a few other nights shortly thereafter, but we started to put some pieces in place to turn our lives around.

I was afraid to talk about money – and it cost me. I avoided talking about money for years and instead watched our financial situation spiral downwards. When I realized I had to talk about it, I still kept putting it off.

And for what?

Another example: my parents are getting older. I keep seeing little signs of it, time and time again. There’s a half step that’s missing. There’s a parent getting tired surprisingly quickly. There’s a wrinkle or a gray hair I hadn’t noticed before.

I don’t want to talk to them about their finances and their estate planning. It scares me to ever think that they might pass away. So I put it off – it’s easier, right?

But one day that event will come. Maybe that event will take both of them at once, or it’ll leave one of them behind, unable to handle what comes in the aftermath. The thought of that moment, as it comes quietly closer, is beginning to worry me more and more.

So I finally did it. I called up my parents and suggested that sometime soon, I spend a weekend with them figuring out everything in their estate and walking through it.

Breaking through that social and personal barrier of talking about money is incredibly difficult, but it’s vital. Without doing it, you open yourself up to paying the penalty of countless mistakes and facing some deeply painful situations that could have easily been avoided had you just spent a bit of time talking about it.

Important Things to Consider When Talking About Money

What’s Unresolved?

Look around your life, particularly your closest family and friends. In each of those relationships, there are likely things that are left unresolved, things that, in your perfect world, they would be resolved. Here are some examples.

Your partner.

Are you sharing the same dreams for the future? Do you have any debts that you’re hiding? Are you in better – or worse – financial shape than your partner might believe? Are you in agreement about how to handle your respective property in the event of the other’s passing? Is your relationship fulfilling you, making you happy?

Your parents.

Do they have an estate plan in place? A will, at least? Are they prepared for the financial costs of retirement? What are they expecting from you when they retire?

Your children.

Are they expecting you to pay for college? Are you expecting to? Are they expecting you to help with a wedding? Are you expecting to? Do they understand your estate planning?

Other relatives.

Do they owe you money? Do you owe them money? Are there other problems, such as caring for older family members? Who’s responsible for what?

Your close friends.

Are they constantly engaging you in activities that cost more than you are comfortable spending? Do they owe you money? Do you owe them money?

This is just a start. Even in my own life, after lots of talking about money with the people around me, I still don’t feel as though the door is shut on all of these issues.

I will say this, though: every time I made an effort to actually talk through these issues with someone important to me, I found that I had put it off for too long and worried about it too much, because it went easier than I expected and there was much relief afterwards.

Is Everyone Involved That Should Be?

Whenever you address a complex issue, the ramifications often affect all sorts of people, and it’s usually a very poor idea to start making big changes without seeking their input.

So, before you even start discussing these things, get everyone involved that should be. If you’re talking about a person’s estate, make sure anyone who has a significant stake is involved in the discussion – or is at least carefully considered to be a part of the discussion.

Quite often, this seems painful. I immediately think of some of the estate planning situations I’ve witnessed and been involved with. It was obvious at times that things – and people – were being cut out in order to preserve the comfort of now while postponing the painful part until later.

Each time, it ended in disaster. Siblings not speaking to each other for the rest of their lives. Friendships ended because of “backstabbing.” Lawsuits.

You’re better off swallowing your pride and getting everyone relevant to sit down and talk about things. If someone won’t participate, that’s their decision, but the door needs to be very open to them – and it needs to be clear that the door is open to them.

Getting the Necessary Information

Data is the enemy of lies, lies are the enemies of trusting relationships, and the maintenance of trusting relationships is why you’re doing this in the first place.

Yes, people are defensive. Yes, it hurts to tell the whole truth sometimes. So make it easier on everyone – bring as much real data to the table as possible. Get out those statements. Figure out how much is there.

People are going to be uncomfortable with this. The best thing you can do to quell that is to step up to the plate yourself. Bring your information and offer to show it if they will. Your openness and honesty creates a standard that others will feel some strong desire to live up to, lest they look as though they are being dishonest or are hiding something.

What about feelings? Again, honesty is the best policy and, again, your best bet is to lead by example. Behave in exactly the way you’d like others involved to behave. Share every drop of your relevant information. State your opinions and feelings openly, honestly, and calmly.

Real information and real honesty are powerful tools for cutting through the layers of personal feelings and getting directly to the heart of the matter.

Getting It Done

You know what you want to talk about. You’re prepared to bring honesty to the table. You know who needs to be involved. Now, you just need to do it.

Plan to talk about it in a place that’s as safe as possible for all of the participants – a comfortable place. A person’s home is usually the best choice unless it inherently causes some discomfort.

It should also be a place where, if numbers are going to have to be analyzed, all of that data is easily available. Thus, if you’re going to walk through some estate planning, you may want to do it at the home of the person whose estate is being planned.

You should schedule a very clear time when this is going to be discussed and make that time and date known to everyone who might be involved. Give plenty of time for this, so that you can schedule around any conflicts. Don’t just decide one Saturday morning that everyone is going to meet that afternoon.

Another key factor: if it’s really involved, plan things around another activity. Make dinner during the discussion so you can dine together afterwards – or dine as a break.

A final key factor: make sure that the meeting ends with some very clear actions for some or all of the people to take. What needs to be done to make these plans a reality? Without specific actions, nothing will actually happen as a result of the talk.

Dealing with Anger or Hurt Feelings

Because money has such a huge emotional factor, you can pretty much expect that if a discussion is intense enough, people are going to get angry or upset or have some sort of emotional response. So, plan ahead for it.

1. Make a very clear rule that raising your voice or being obviously angry isn’t allowed.

If someone gets angry, just call a time out and let everyone chill out. Nothing good comes from allowing a discussion to continue if participants are angry or upset because the emotion will just rapidly escalate. Then follow that rule. If someone gets upset, just take a break until everyone is calm again.

2. Make it clear to everyone what the end goal is and make sure you all agree.

If it’s about estate planning, for example, make it clear that the goal is to help your parents develop a plan that reflects their wishes – and that their wishes are final because it’s their estate.

3. Don’t let hard feelings run after the event.

If you’re sure that emotions are going to run high, plan a family dinner or other special event immediately afterwards to work on healing those stressed bonds. Feelings like these should not be allowed to fester.

Following Up

After the conversation, you’ll likely find yourself with a list of actions and probably some bruised feelings. Both elements deserve some follow-up.

Talk to the people involved afterwards and see what you can do to alleviate any hurt feelings. Pull back to the general purpose of the meeting and remind them that the big goal actually happened, even if it hurt. Listen to their concerns and don’t talk them down – agree with them, at least to the extent to let them know that their feelings are at least understood, even if you don’t agree.

You should also follow up on any decided actions. Make sure that the people who agreed to do things actually do them. This might even involve some follow-up meetings to ensure that these actions happened or that further input is received.

This sounds like a lot of work but the benefits are tremendous: stronger relationships, an assurance that the important things are taken care of, and potential crises averted. Talking about money honestly is a huge positive once you get past one’s fear of it.

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  1. DIY Joe says:

    Even if you have no one else to discuss money with, it is CRUCIAL that you be honest with yourself about how you are spending your money. Lying to yourself just makes getting your financial house in order very difficult.

  2. Rosa says:

    AWESOME article.

    It’s really hard to start these discussions, it calls your whole self-image into question, but they are really important.

    And I really admire how on-the-same-page you and your wife are. My partner and I share 90% of our money-handling ideas – but man do we fight hard on that last 10%.

  3. Angie says:

    I completely agree. After being together nearly 6 years I had my first money talk with my fiance this January. Before it was mainly me complaining about loans and nagging about big purchasees (but giving in anyway). Once we had our first talk and went through all our loans, how much has been paid off, where we waste a lot of money, we had a lot of discussion and set out a budget. We made a pact to stick to it and so far we are doing well. Although not perfect (went over the budget a few times) we get better every month.

    It has paid off too. In the 6 months since our first real money talk we have paid off $25,000 in debt. There is still lots more to go, but that 25k is more than we had paid off the entire year prior. And now that he is interested, and completely aware and involved in everything saving and paying off debt is finally sustainable.

  4. Marsha says:

    I’m curious about the topic of talking with one’s parents about their estate/retirement planning. Is that something all children are supposed to do? Or is it just something that was important for Trent to do with his parents? I cannot for a minute imagine that kind of conversation being appropriate in my family.

  5. Dr. Faith says:

    One of the nice things about being lower-middle class (or upper lower class, not PRECISELY sure) growing up was that a lot of the financial questions for my mom were understood. For instance, the question of college, I knew that my mom didn’t have the money to afford to send me – so if I wanted to go I’d have to get scholarships.

    However, she did make a lot of “bargains” with me even after I got my full scholarship (including room & board & books) to my dream school – she said specifically that if I kept my grades about a 3.7 (the minimum to keep my scholarship) that she’d make my car payments and car insurance payments for me (a grand total of $200 she was paying a month).

    Now that I’m “grown” – aka 10 years later – I find it surprisingly easy to talk about money with my significant others – at least MY situation with money. I let them know when I can’t afford to do something and have been surprised by their understanding towards my ‘crazy’ ideas of how little we should be spending. However, I’ve found that the reverse isn’t true. Just because I am open about my situation has not meant that the people that I’ve been with have been open about there’s.

    However, I’m not married, and my hope is that I will have no debt by the time I am married so that I’m not bring that financial baggage into the relationship. I want getting married to feel like a “fresh start” for both of us – and hope that we both are debt free and have worked hard to become that way before we say our vows. How’s that for ideal thinking? ;)

  6. Jill says:

    That was a great post. Funny thing, this morning I woke up, and thought to myself “I really need to sit down and talk to my partner about my debts.” I’m current with everything, but I have $9K in credit card debts/loan, and $39K with student loans. Until last month, I had NO emergency savings, and decided a few weeks ago, that it is a must. I’ve never been good at saving money (and was never taught to do so), and I’m scared. My partner has no debt. He knows I do have debt, but I have not sat him down and gone over the specifics and my statements. I’m scared to talk about it, but I know that I need to. So, I thank you for the article this morning! I look forward to reading the upcoming rules.

  7. getagrip says:

    I recommend that instead of you doing all the talking, ask questions to help lay the groundwork. What big things would you like in the next few years (new kitchen, nice vacation, etc.)? How do you see us getting there? How do you want your wishes carried out? Is there something specific you’d like to leave for the grandkids? etc.

    If it becomes you do all the talking and expecting answers, it will be a short, and likely angry, session.

    Additionally, understand there may be some folks who just will not let you discuss these issues, or patentely shut you down if you try (“don’t worry, I’ve taken care of it”). You’ll have to decide if you want to dig deeper or try again later or just let it lie.

  8. Having spent many years taking loan applications from people, I can attest that as often as not, people don’t know what’s going on with their own spouces. And few people have a complete picture of the true state of their finances.

    Assets (esp real estate) are commonly overstated, and debts are almost universally understated. There’s solid evidence that a lot of financial discussions aren’t happening.

    Just a suggestion, but it might be helpful to sit down and have that “chat” with yourself first. That is, get all the numbers out in front of you so you have a full grasp of what’s going on and have some time for factual meditation. Then take it up with your spouse. A lot of people are defensive about finances, because it isn’t all about money. Personal habits and preferences often control, and that’s where things get sticky.

  9. kev says:

    I used to avoid talking about money as well. With myself or with my wife. But we managed to smash that barrier, and it made our relationship stronger.

    Talking about money gets easier and easier, too. Used to be, I’d never open the bills for the visa and store card that are in her name. Now I open them regularly, and she opens mine, whoever gets to the mailbox first, and the opened bill is left on the table. The bill is discussed, but not at length: We don’t have surprises like we used to have.

  10. Rosa says:

    Marsha, I think it depends – one of my parents, their money situation is none of my business and if they end up in a crappy cheap nursing home, I will visit them there but that’s it.

    The other 4 old people we could potentially be responsible for, the ones we’ll be paying for home care or having in our spare room if they run out of options, we have had the money talk with – and also the “what kind of medical decisions would you like made?” talk and the “what kind of funeral arrangements would you like” talk. And we’ve discussed with their other kids, too, to make sure everybody’s on the same page.

    I have too many friends who suddenly have parents living with them because the parents lost a job within 5 years of retirement age – and had no savings, refinanced houses, credit card debts, etc. Boomers, as a rule, have done a TERRIBLE job with retirement planning, and in this economy if a 58 year old gets laid off, what are the chances of them finding a new job or being able to sell the house they thought they had a ton of equity in?

  11. Brittany says:

    Excellent article. This is a discussion I really need to have with my mother. I just moved out of state and I meant to have the discussion before I moved, but it kept getting put off and I really regret it. (It’s also even more important for me because I have young siblings whose father is out of the picture, so the money discussion needs to include planning for if something happened to her while the kids were young and living at home, now that I am in a financially capable place to be able to take care of them in a worst-case-scenario.) But it’s just so hard to find a time and even harder to start this kind of discussion! Thanks for the encouraging nudge.

  12. Melody says:

    Rosa – exactly. I fell under someone else’s point above where growing-up I knew what we did/did not have available, and there still isn’t a whole bunch to go around. I just got off the phone with my parents today and we all have decided they need to move in with us. We’re not entirely stable, but my step-dad has throat cancer and my mom has Rheumatoid Arthritis, making it impossible for her to drive, do simple shopping, etc. They live 2 hours away! Since she just got terminated from her job for absenteeism, what else are they going to do?
    It’s never the ‘expected’ stuff you should have a plan for, even if it’s only in your head. It’s the un-expected stuff that always gets ya! Luckily in our case, we knew this would be coming at some point, given her RA. Having it happen because of his cancer is no fun, but there are several ‘silver linings’ to this situation, also. I suggest anything like that be brought-up in discussions, as well. Estate planning for older individuals, even yourselves, is all about what the person being planned *for* wants. I think too many households take it as ‘we get to determine mom/dad’s, sister/brother, etc. future”. Which should never be the case. That’s about as bad as the maid-of-honor taking-over the wedding planning w/o being asked. :-)

  13. Damester says:

    Great article emphasizing the importance with both spouse and parents of discussing financial issues.

    Alas, if one’s parents refuse to discuss this (close friends had this problem; his mother in fact refused to speak to him after he very tactfully brought up the issue and she even accused him of “wishing her dead to get her money”), you can’t do much about it.

    A successful talk assumes that all parties will be adult, calm and cooperative. This is rarely the case, at all socio-economic levels.

    I don’t know one friend who didn’t have huge problems getting needed information. Most got nothing and of course when their parents passed it was a nightmare for their families on so many levels.

    I have to laugh when families say they are close and loving and then those very same older parents will not cooperate with their kids about sharing information needed to ensure their last wishes, etc..

    If you love people, you don’t leave them in the lurch, that’s for sure.

    And if you love people, you want to plan ahead so that when the inevitable happens, those you leave behind don’t have to incur debt, extreme hardship, etc on behalf of people who didn’t show the most common courtesy to their family.

    We have neighbors, the adult children of two fairly well off sets of parents. Each lost a parent within three weeks of each other. Neither parent had a will, they died alone and the family was tied up for months in legal matters. The “kids,” who did not have extra money, due to both being unemployed and putting their daughter thru college, had to borrow to pay for all kinds of things.

    That, folks, is not leaving a legacy of love for your family.

    You don’t have to bare your total finances to your kids, but if you want them to take care of things after you’re gone, you need to cooperate in advance. This is not the time to omit, lie or play games. Yea, there may indeed be hard feelings but sooner is better than later.

    The reason so many put this off is not just because of the nature of it, but because it really does reveal how close, or not, a family is. And how dysfunctional.

    FYI: The friend whose mother stopped talking to him when he tried to help her get organized financially? She developed a terminal illness and he turned his life upside down to ensure her care in her last years. She made his life and that of his family a living hell even then, yet he continued to care for her.

    And to save your sanity, if your parents refuse to cooperate, and you have been courteous and respectful in your approach, make it clear that you will not be responsible for what happens to them.

    Yes, you sometimes have to go to that extreme to get their “cooperation.”

    At the very least, you need to get power of attorney. If you can’t get that, you really can’t help them.

  14. AJ says:

    My family could have used this article when my grandparents passed away without a will and an estate valued over a million dollars. They are still in court and fighting with my family 4 years after they died.

  15. Bill in Houston says:

    People don’t really talk about money. They lie about it, whether how much they make or how much they owe. As a result, the overconsume on the former or underpay on the latter.

    Keeping up with the Joneses syndrome at work.

    I stopped a few years ago when I was living beyond my means. I’ve accepted that I don’t make more than a third of what my best friend does. I paid off my high interest debt and have decent savings now. I don’t need to compete; my ego is fine.

  16. Katie says:

    Ugh I wish all people were as receptive to these conversations as your family. My family gets defensive before we can even sit down. It’s lovely.

  17. Marie says:

    My husband and I are over 50. The other day my oldest son emailed me an article on the web about estate planning(wills, power of attorney,etc) I checked it out and then emailed him about we have done pretty much of what was indicated in the article. This let him know that we are on top of the situation and he didn’t need to worry. He emailed me back and was grateful that I let him know that. To be a close , loving family it is a must to let your children know some of the details that will help them take care of things if something happens to you.

  18. Lou says:

    A comment and suggestions about “having that talk with parents”:
    Be aware that end of life planning is MUCH more than just financial. The Robert Wood Johnson Foundation in New Jersey puts out a great booklet called “5 Wishes” that gets to the nitty gritty of what we want when seriously, possibly terminally, ill. The idea is that you sit down with a loved one and go through the questions together. And the questions are not just about funeral planning. they ask when you would want treatment stopped; do you want people around or quiet when you are seriously ill or in coma; do you want music in your sickroom – what kind?; do you want to be in hospital with no holds barred or home under hospice care? Which person you want to make health care decisions for you when you can’t make them. The kind of medical treatment you want or don’t want. How comfortable you want to be. How you want people to treat you.
    What you want your loved ones to know.

    The parents or children can initiate the topic by saying There’s a form I want us to fill out together. You’ll be glad you did!!

    Four very thorough pages of things I would never have thought to ask. My mom had serious cardiac problems and didn’t want surgery – absolutely refused to consider it. I sat down with her and the booklet and we went through all the questions. It took an hour and a half and we both cried, but it is one of my fondest, dearest memories of spending time with her – it was so intimate and caring.

    Six months later, when my mom had a sudden cardiac failure, my brother and i held her in our arms as she died. We knew she did not want us to call an ambulance or have EMTs pound on her chest. And she dreaded the ICU. She wanted to go when she was called, to go naturally without medical “interference”, and with her family around her. If we hadn’t had that talk and that booklet, she definitely would not have gotten what she cared intensely about but had never before expressed.

    The booklet is $5 for individual copies, less if bought in bulk. Might be available free from a local hospital or hospice. To get it online:

    The RW Johnson site has lots of other helps for families and caregivers dealing with medical issues:

  19. Claudia says:

    Boomers, as a rule, have done a TERRIBLE job with retirement planning–
    Hey!, NO Boomer bashing! Reasons why they may have done a terrible job? Very few employers used to offer any kind of IRA type savings plans. This is a relatively new idea, which is probably going to go away shortly also as businesses try to rein in their expenses. Low pay made any kind of saving very difficult. Many Boomers grew up a LOT rougher than any 20-40 yo of today. As a consequence, they tried to give their children all they didn’t have. The result? – they raised a lot of self-indulgent, entitled children who would make this type of statement not thinking that mom and dad have no retirement savings because they paid for your college, first car, car insurance, ostentatious wedding, etc. etc. etc!

  20. Dr. Mary Gresham says:

    You are right..there is still a “money taboo” in place and it is harder for most people to talk about money than to talk about sex. No one here has suggested seeking a family therapist or counselor to help them have the hard conversations but this is a large part of my work as a psychologist. I hope that you will continue to bring up the hard topics with lovers, parents and children until it begins to feel more natural and acceptable as a topic. Families are tied together financially and what affects one, alos affects the other members.

  21. steve says:

    @ Marsha , “I’m curious about the topic of talking with one’s parents about their estate/retirement planning. Is that something all children are supposed to do? Or is it just something that was important for Trent to do with his parents? I cannot for a minute imagine that kind of conversation being appropriate in my family.”

    Whether it’s appropriate in your family or not, it is appropriate for your own information, because likely you will be involved in sorting it out, when it happens, to know how your parents have or haven’t made preparations for their deaths and their estate. It is a normal conversation and I would be rather surprised if parents in their 60s are not mature enough to have it with you.

    I would approach it as if it was as normal a conversation to have as talking about the rain. Most parents have devoted some thought to it but maybe haven’t had occasion to bring it up with their children. You provide the opportunity to discuss it by bringing it up.

    Also, it puts you in the driver’s seat a bit more because by their response you’ll get lots of information as to whether their planning is adequate. If it isn’t then you know to prepare to more or less of a mess after their death.

  22. steve says:

    @ marsha again,

    keep in mind that (depending on the parents), many parents would like the opportunity to pass on what they have learned about retirement planning, perhaps complete with what they didn’t do and regret not doing, to their children as part of their kids’ education and preparation for the retirement stage of life. By bringing it up you create an opening for them to pass that information on to you.

  23. Great advice! I know so many couples who refuse to talk about money, and it only hurts them. Thanks for this article!

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