Talking Dollars Makes Sense

It’s not easy having conversations about money. Carl Richards, director of investor education for the BAM ALLIANCE, says they can “leave us feeling confused, misunderstood, and even angry.” That doesn’t mean you are better off not having these talks. In his book, “The Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money,” Carl writes about the value that can come from having honest, clear conversations about your important financial decisions.

When someone says, “It’s only money,” they’re usually wrong. Our feelings about money run deep, and they are often very complicated – and sometimes quite confusing. No wonder things can get pretty intense when the subject of money comes up. It breaks up marriages, families, friendships, communities – even countries.

Money conversations are also complicated by the fact that few people know much about personal finance or investing. Choosing a mortgage or even a credit card is a complex process these days – few of us are really qualified to decide between the products out there. The same goes for investments.

It’s all pretty daunting, and we have a natural tendency to avoid things we don’t understand. We are wired to either fly or fight in confusing situations. So we avoid the topic of money – or we fight about it.

Money is too important a topic to avoid – and fighting doesn’t help. We need to develop a deeper understanding of what we talk about when we talk about money. And we need simpler language. We need to develop more straightforward ways of representing concepts and principles so that we can understand each other when we do have these conversations.

There is a growing recognition that great conversations about money are really great conversations about life. This recognition includes acknowledging that the traditional approach of the financial services industries can lead to poor decision-making. Saving, budgeting, investing, tax planning, insurance, and estate planning should be related to the larger context of your life, your goals, and your values.

I believe one of the most important things I can do when faced with a financial decision is to talk to someone I trust: a friend, a family member, or a paid professional.

Start talking to people you trust about questions that matter to you.

What role does money play in your life? What needs to happen in the next few years for you to feel like you are making good progress? What money mistakes have you made in the past that you want to avoid in the future?

Too many of our financial conversations are about finding the best investment or best life insurance.

Try to talk about what matters to you.

– Excerpts from Carl Richards’ book, The Behavior Gap.