Growing up, one topic was always off-limits in our family. It was spoken about in hushed terms between my parents, politely skirted around during conversations with other people, and if we kids brought it up, we were scolded that “it isn’t polite to talk/ask/think about those things.” The secrecy and implied shame that surrounded it still lingers with me today.
That topic was money. And the taboo was something we shared with many Australian families.
It was recently reported that we would rather talk about sex, religion or politics than discuss money. One in five of us say that we would prefer not to talk to anyone about our household finances. 39% of parents are more comfortable talking with their children about drugs and alcohol and 27% would rather talk about sex or dating than money.
I was discussing this taboo, and the research we were doing on it, with one of my friends recently. “What’s the big deal?” she asked. “There’s tonnes of things we don’t talk about.”
The big deal is this: it turns out that one large driver of financial wellbeing is the ability to talk about money openly and without shame. For one thing, money conversations help us to learn about what’s normal or what to expect when dealing with the complex world of finances. You can’t advocate for yourself or negotiate better deals and higher salaries if you don’t know when you’re being ripped off. For another, they help us to overcome the shame and stigma that many of us feel when we struggle with money, allowing us to reach out for help or simply find the reassurance that we are not alone with our struggles. As the saying goes, “a problem shared is a problem halved.” Finally, conversations build confidence and knowhow over time, making us better at asserting our rights, raising complaints, and dealing with financial institutions.
We’ve found evidence for the importance of conversations time and again in our research into best practice in building financial wellbeing. For instance, evidence shows that young people who have parents that talk to them about money as they are growing up have greater financial literacy, more positive attitudes towards money, less debt and less likelihood of problematic credit card use as adults.
For some groups of people, the importance of money conversations is even greater. For instance, financial conversations are important for older Australians to protect their wellbeing and rights as they begin to seek support managing their finances as they age.
Similarly, being able to have healthy and open conversations about money helps women maintain their financial independence and security, and avoid situations of financial abuse and control by a partner or family member. The importance of conversations for women has been affirmed by recent initiatives, like ASIC’s Women talk money campaign, WIRE’s Women Talk Money Website, and Commonwealth Bank’s recently released Women’s Financial Wellbeing Guide.
In our next blog, we will discuss some practical strategies for designers of financial interventions that can help to get the conversation started.
This is the first post in a two-part blog series that examines the importance of financial conversations. This first post provides an overview of the research on the link between conversations and financial wellbeing.