Money conversations you simply must have

By Sherie Holder-Olutayo | Tue, July 31, 2012 - 12:00 AM

For most of us today, money is the hot button issue in our lives. But most people will tell you that they don’t have enough of it to go around, and that in these days one must be fiscally prudent when it comes to spending.

However, for something so crucial to our everyday survival, most people don’t talk about how they plan to spend or save it, or even seek financial advice.

With the global recession in full swing, and everyone tightening their belts, this is a good time for families to sit down and have those money conversations. According to local financial consultant Diana Moulton at ICBL, talking about money is something that we all must do, especially now. Here are four must-have money conversations we all should have.

1. Money conversation with yourself

Sitting down and charting a financial course for yourself is one of the most important things you should do. “Anyone who does not plan is basically setting himself up for failure [since] you need a road map,” Diana said. A good way to get started is to look back over your receipts at what you’re spending money on. That way you can see where you can cut back, and how you can save more.

“There are some months when things come up that you [don’t] anticipate, so you have to be able to set money aside,” she stated. “If you’re not able to save, you need to readjust your goals.” She added that being frugal can reap huge benefits. If you’re accustomed to buying lunch daily try taking your lunch to work for that can work out to a savings of $100 weekly. Diana advises people to try to make better buying and spending choices.

“If you find you’re having a hard time perhaps you should set up an appointment with a financial advisor,” Diana said. “Even the most learned people have advisors and people that they know to sit down with them and show them where they can cut back.

“We get so caught up with having material things but if you’re not getting to your financial goals, you need to look at where you’re going wrong.”

2. Money conversation with your spouse or partner

Nothing can drive a wedge between couples [more] than issues about money. In fact, numerous studies have shown that money fights predict divorce rates.

But Diana said that couples can navigate the financial waters better if they’re open with each other.

“It’s important that they know what each person is coming to the table with,” she advised. “You must have a conversation about each other’s personal and financial goals, whether you’re planning to have children, or buy a home. You must be able to set out a budget and have an idea of what goals you’re working towards.”

Debt can be a big factor in your ability to spend and save, so couples need to come clean about how large their debt load is.

“Couples need to know each other’s incomes, how individuals are spending money and how much they’re saving. If it’s a case where you’re in a lot of debt, don’t be afraid to ask for help” she says. “Lending agencies can find ways to help you consolidate, pay down debt and get on the road to saving.”

3. Money conversation with aging parents

Sometimes parents can be tight-lipped about their private and financial matters. But that [can] become problematic as they get older and especially if their health starts failing. More people are becoming part of the sandwich generation where they are taking care of elderly parents along with their own families, so the financial burden becomes greater.

“It is important that at some point you sit down with your parents so that you can find out where they keep important documents, whether or not they have a will, and the status of financial documents such as bank statements and insurance policies.”

It is vital especially when you’re dealing with an aged or sickly parent that you know where important documents are as well as their passwords to accounts.

“It’s wise to put pride aside and find out these things because you’re the one that is going to be left in a precarious situation,” she added.

4. Money conversation with children

Talking to children about money is crucial because it sets the stage for how they will handle money in [their] later years.

“Children learn by example so it’s important that as parents we set good examples in terms of our financial habits,” Diana advised. “Kids respond to creativity. Buy them an attractive piggy bank so they can get in the habit of saving money [from] their allowances. Take them grocery shopping with you so that they can see money and budgets in action.”