Money Talk Should Never Be Taboo
By Dara Duguay
Summer 2005
Two subjects remain taboo in many households, never to be discussed. One of them is money.
But when it comes to money, the more it is discussed, the more it is understood. Unfortunately, people are embarrassed to ask questions if they don't understand basic financial principles. They feel that they should already know the answers. So they prefer to remain ignorant rather than risk the humiliation of letting others discover their financial naïveté.
The irony is the assumption that others understand money better than you or that high-income earners always are more successful in managing their money than someone from a lower-paying occupation. Actually, few people have received any formal education in basic personal finance. So you may believe your knowledge is lacking when, in fact, others' ignorance may well exceed yours.
Tiffany married at age 18 and started a family almost immediately after her marriage. Her husband Bob believed she should make the decisions concerning homemaking and the children but that he should make the important financial decisions. When it came to the family finances, Bob felt that since he was the breadwinner, all money matters were within his authority.
By the time Tiffany reached 25, she had no understanding of her family's financial situation and had never even balanced the family checkbook. Bob gave her some cash every week, just as he would dole out an allowance to the children. The cash always was enough to take care of the family's regular household needs, but it was still an allowance – and a humiliation.
Whenever Tiffany asked questions about their finances, Bob's favorite response was, "Don't worry! I'll take care of you." She interpreted that to mean, "You can't take care of yourself." Through the years, Tiffany grew to believe she was not competent to handle decisions that involved money. She gradually stopped asking questions and resigned herself to the belief that Bob was wisest when it came to financial matters.
But Tiffany was surprised one week when Bob gave her an unusually small allowance. She asked about the apparent mistake, but Bob grew so defensive that she dropped the subject. When she began receiving even smaller allowances, she again asked why. This time, Bob's response was to angrily accuse Tiffany of having no faith in him as a provider.
Taken aback, Tiffany decided to never again raise money issues, even when her allowance continued to dwindle and her requests for money to buy toys or clothes for the children went unfunded.
Then came the collection calls – rare at first, but gradually the phone rang every day. Eventually, someone came to the house to repossess Bob's truck. Finally, their landlord posted an eviction notice on their front door.
Bob could no longer hide his financial problems by not talking about them. He admitted to Tiffany that he had taken out several payday loans – short-term, high-cost loans designed to last until one's next payday – and had been unable to repay them. He was stuck in a debt trap, paying new fees every two weeks just to avoid default and keep his original loan outstanding for an additional two weeks. The fees had built up during several months, and the family was thousands of dollars in debt.
The good news was that Bob finally understood the need to ease his controlling ways. Tiffany asked him to begin sharing all financial matters with her, and he agreed. He taught her how to balance their checkbook. She took over the bill-paying duties. They prepared a budget and worked out a plan to pay down their debts. Together, Bob and Tiffany slowly turned around their financial situation.
After a while, it became routine to talk about money. Eventually, they identified family goals such as buying a home and college tuition for the children. Once they agreed on certain goals, they developed a savings plan to achieve them.
This radical departure from the old way of doing things was simply the result of communicating about a previously taboo subject. All families should resolve to talk about money as much as possible. Talk to your friends, colleagues, parents, children and the personal finance manager at your military installation.
Of course, you won't want to share the details of your salary or the extent of your debt level beyond your immediate family and others you fully trust. But financial fundamentals such as investment ideas and cost-cutting strategies are ideal topics for everyday money conversations. The frequency of these conversations almost certainly will have a direct correlation to the level of your prosperity.
The more the better.
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Dara Duguay is director of the Office of Financial Education for Citigroup and the author of several self-help financial books. Her most recent is "Don't Spend Your Raise: And 59 Other Money Rules You Can't Afford to Break." Her books may be found at www.amazon.com or at any major bookstore.
