Talking about money with your loved ones can feel uncomfortable. It can be awkward. It can be so difficult that you just avoid bringing up the subject altogether.
But you’re not doing yourself any favors by putting off the conversation. You’ll have a hard time saving up for a house with your partner if you can’t confront each other’s poor spending habits. You don’t want weekly outings with friends raising your credit card debt because you don’t want to mention you’re on a tight budget.
Erin Lowry, a financial expert and founder of Broke Millennial, focused her latest book “Broke Millennial Talks Money” on the topic of navigating tough financial conversations. She recently joined The Penny Hoarder for an online discussion where she shared tips and advice.
The following is an abridged version of that conversation, edited for length and clarity.
10 Questions With Erin Lowry of Broke Millennial
1. Why is it important for folks to be open to talking to people in their lives about money, even when it’s awkward?
You can do everything right to build your financial house, but if you cannot communicate effectively, if you can’t set healthy boundaries and if you do not know how to engage in these tough financial conversations, it’s going to start to slowly crumble the foundation that is your financial house. It’s useful that we learn how to navigate awkward money conversations, because they’re going to keep happening through our entire lives.
2. Why do you think it is so taboo to talk about money?
Judgment. I really think that that’s the word that sums it up. Oftentimes, we are fairly comfortable talking about money with total strangers. I’ve had many — pre-pandemic — fun conversations on the airplane with people about their financial lives, especially once they find out what I do. And there’s no risk there. I’m probably never going to see them again, so people get really vulnerable and open. On the flip side, I’ve had friends and family members not as willing to be open because there is this feeling of: “Oh, am I going to be judged?”
3. What should you do if you want to have a money talk with someone but they’re very hesitant?
It depends on who the person is and why you’re trying to initiate the conversation. There’s a big difference when you and your partner are getting really serious and about to move in together. That’s then a necessity to be having the financial conversation.
But every so often I get messages that are like: “My best friend’s pretty crappy with money and I want to have a conversation with her about how to be better.” Well, listen, if she doesn’t come to you, if she doesn’t ask, it’s — at the end of the day — not necessarily your business to offer guidance and advice.
You really need to allow this to be a very collaborative conversation. Maybe you share something about your own success and that can open the door to being asked questions to initiate more conversation. But sometimes, it is very much a “not your business” situation and if you overstep boundaries, people are also going to get uncomfortable.
4. How do you know when you’re in the right place in your relationship to start talking about finances?
While I would love it if everybody on the first date was super comfortable baring it all, that’s just not realistic. What you can do is to start taking notice of context clues that you’re being given along the way. This includes comments that get made, ideas for how much you should be spending on dates or trips or presents to each other, where that person lives and what kind of car they drive. All of these are giving you signals about how they value things, how they spend their money and either how much they’re earning or potentially how much debt they’re in.
Beyond that basic level, you should begin to get fully transparent with each other about money at the point where you look at that person and think, “I could spend the rest of my life with you.” When you realize that it’s that level of seriousness, you need to have the full conversation. That means sharing all of the information: salaries, credit scores, history of relationships with money, debt loads, investments, absolutely everything. It doesn’t have to happen all in one conversation. It can be an evolving conversation over time.
The other thing I really want you to know about your partner is their triggers when it comes to spending money — what makes them uncomfortable, what makes them want to spend, what their emotional relationship with money is and what they grew up around. Not just what their socioeconomic background was but how was money talked about and treated in their family, because that is eventually going to rear its head in your relationship dynamics.
5. Should you wait to get married when you’re both in debt?
No, not necessarily. My husband had over $50,000 worth of student loans when we got married. You need to understand the type of debt that it is and the laws in the state that you’re getting married.
I’m a big advocate of the prenup myself, so I do think it’s really important to consider going through the prenuptial agreement process. We truly need to reframe how we think of prenups and think of it more like marriage insurance.
A lot of times when I say the word, people get triggered, like: “Oh, you don’t love or you don’t trust your spouse.” No, that’s not true. Everybody getting married has a prenup. It’s the default laws of your state. If you create your own prenuptial agreement, you’re basically creating a slightly different system that you feel would be a fair and equitable division of assets or any debt.
Now all that being said, if you do have debt, depending on state laws and when the debt was created, you’re not necessarily liable for your spouse’s debt. I do think that if you are going to wait, it could be a decade or more before you’re then able to get married if you’re waiting for someone to be debt free.
And the other thing is I don’t think of debt as a red flag for a relationship. What is a red flag is how the debt is being handled today. If there’s credit card debt from five years ago, maybe there was a medical emergency, maybe something happened or maybe they just weren’t good with money at that phase in their life. But now they have a plan and they’re paying it off. If instead there’s a continual cycle of creating debt, that is a red flag.
6. What advice would you give about how to compromise in a romantic relationship before things lead to a bigger money fight?
One of my favorite pieces of advice that an expert told me when I was writing “Broke Millennial Talks Money” was that it’s okay to just let a person take the win sometimes. Say you and your husband want to buy a couch. You want to spend $3,000, and he wants to spend $1,000. Well, $2,000 would be the compromise, meeting in the middle. Instead, it could be that you get to spend the $3,000 on the couch and then at another point, he’s going to get to take the win on a money conversation.
The other thing, too, when you’re getting into a fight about money — especially with purchases that you want to make — is to come back to the original goals that you have set. And if you haven’t set any as a couple, take a minute to do so.
Develop strong money goals by making them SMART goals.
Your goals are the north star of your entire financial plan. Anytime there is a big debate about how you’re going to spend money, you need to look at how this is going to have a ripple effect on everything else you want to achieve and that can help solve the problem.
7. Do you have any advice for people on navigating cultural norms when talking about money with family?
I do think it’s really critical that we start to have conversations early on about what is the expectation — particularly if you are living in America and you’re married to somebody who has a different cultural expectation of how to handle aging parents or a dependent sibling or a sick relative.
Also, you need to talk to your parents. You need to ask them early on what they want. For some parents, it’s going to be obvious that they expect to live with you in their later years if that’s your cultural norm. You probably have an idea that’s the expectation, but it’s still good to have a chat about it.
For others, your parents might tell you don’t worry about it. Just because they tell you that, doesn’t mean you’re not going to worry about it. I think a really easy way to turn the conversation around is to ask about what they see their retirement looking like. Over time though, it does need to start to become more of a real conversation about the finances.
8. How do you bounce back from a falling out with someone about money?
I think that depends on how necessary — and this is going to sound a little harsh — it is to bounce back from it. What one of the financial therapists in the book said, pertaining to friendship dynamics, is that not everyone is a lifelong friend. I do think that an important thing to consider is that there are friends who will be close friends with you only through seasons of your life. That doesn’t mean that anytime there’s any difficulty or strife, you say, “I’m out!” But it is an important thing to keep in mind.
9. How do you advocate for yourself when you and a friend have different values when it comes to spending money but you want to do things together?
Provide an explanation. It really does help provide context for why you keep saying no or keep pushing back. Now, just because you have different values doesn’t give you the right to belittle their values.
Let’s use an example of going out to brunch. Bottomless brunch is going to cost like 50 bucks and you don’t want to spend that much. You can say, “I really want to spend time with you but I’ll be honest, I don’t want to pay bottomless brunch money right now because I am trying to [insert thing here]. How about we grab a bagel and go for a walk in the park? Or how about you come over and I’ll cook us some brunch?” Provide some sort of alternative solution for the fact that you’re saying no.
This list of 100 free things to do can help you find an activity to do together that won’t cost any money.
Now remember, they’re free to do whatever it was they initially planned to do. Just because you’re removing yourself from the equation doesn’t mean that they have to adjust plans. Providing that alternative, however, maybe you can just set up plans for another time.
Another thing you can do is join later. I really love this for birthday dinners and splitting the check. You could join for dessert after or for a drink after. You’ll miss that whole part that’s going to cost the most amount of money. Just tell your friend you’re going to do that ahead of time.
10. Do you think this experience of living through the pandemic will help people become more comfortable talking about money?
I really hope so. I do feel that we certainly have had an unprecedented experience and unlike other recessions prior, most people did not have any level of personal culpability for what happened to them.
You could have had your financial house in totally great shape. You could have had six to nine months — even a year’s worth of emergency savings — but if you worked in an industry that got totally shuttered during the pandemic, that’s not on you.
I do think that, hopefully, people will feel slightly more comfortable having conversations about getting into credit card debt or being behind on bills or their credit score taking a hit because truly it wasn’t their fault in a lot of ways. So that might give us the flexibility to have less judgment wrapped up in some of these financial conversations.
Nicole Dow is a senior writer at The Penny Hoarder.