Wells Fargo About Money: What are the risks in talking money?

Transcript:
Hey, humans, I’m Michael Liersch, and this is the About Money Podcast, presented by Wells Fargo. I’m a behavioral scientist who loves openly discussing money to help humans better understand their money behaviors. By understanding our money behaviors, we all have the opportunity to make better money decisions.

We’re gonna have a lot of fun together, and start our first season with money taboos. For many of us, money was and still is a taboo topic to openly discuss. The question is why? We’re gonna address those taboos head on. And break through money silence. So we can all get closer to our money goals.

In this episode we’re going to ask ourselves what are the risks of talking about money?  So when we think about focusing on the risks of talking about money, human beings really like to avoid risk. I think all of us know that.

While there are risks, there are real downsides to it, there are actually benefits. So let’s go through some of those risks, but then let’s quickly pivot to translating that into also some potential benefits so that we actually have the right associations and framing around those potential risks.

So the first is that if we are unprepared for that money conversation, what it can do is it can lead us to being very emotional when engaging in money talk. So, for example, if I don’t share your perspective and you don’t share mine I can get very defensive. I can feel unheard. I can even feel embarrassed or angry and automatically what that does is that puts us in a place of misalignment. That is a key risk in terms of talking about money.

So on the other side of that we have to think of, well, what would be the benefit?  The benefit would be that if we are prepared and we come to the table understanding that we might have different perspectives and we manage that appropriately what we can do is say, well, you feel this way, I feel that way, we can share our feelings and try to find common ground.

So in this first idea preparation is very critical to diminish the risk of engaging in money talk and can enhance the idea that we might achieve some sort of benefit from expressing our feelings, feeling heard and understood, and also hearing other people’s feelings and understanding their perspectives as well.

The second risk that really is involved when it comes to money talk is that without any agenda or pre-prepared idea of what you talk about when it comes to money is that the money conversation quickly goes to what you’re doing wrong when it comes to money and what I’m doing right. And without that clear agenda, that’s really a dangerous path to go. Because pointing out what other people aren’t doing right when it comes to money, especially with key collaborators—so think of spouses, partners, family members—that really becomes, again, an adversarial conversation that’s not only emotional but actually can lead to you digging up perspectives or revisiting decisions that may not be fully fact-based but may just be based on your perspective and you may even say things that you don’t mean that you cannot take back. Especially when it comes to money that can be a really unproductive dialogue and lead to no further money conversations again.

So on the benefit side the idea here is, really think about what it is you want to talk about when it comes to money. Create an agenda and the benefit there is that you can be very targeted about the topic. Is it about spending?  Is it about saving?  Is it about sharing money?  Is it about investing? What is the specific topic?  Get granular. Create a specific point of view that you want to share with one another so that you can make sure that that space is blocked and you don’t veer off into these other places that could lead to those unproductive accusations or revisiting those ideas that may make the other person feel on the defensive or like you’re re-imagining history.

The third risk that I would highlight is that oftentimes when it comes to money conversations when you’re unprepared and you don’t have an agenda, there is really no beginning or end to the dialogue. And what I mean by that is that at exactly the time when you shouldn’t be talking about money. I think we can all imagine when those times are, so you come home from a party, or you are in the middle of another activity and someone comes in and starts talking to you about a money decision that’s difficult or challenging and you’re distracted and focused on something else so, when there is no beginning or end. You, didn’t really time-block it. What can happen is it creates a set of interactions that don’t feel like you’ve really defined the problem statement that you’re trying to solve together or the opportunity that you’re trying to engage in together. Therefore there is no real end or let’s call it closure to that conversation.

And I think we’ve all been in conversations that didn’t really have a start or didn’t really have an end and they can cycle. They can go on and on and on and on and on, be brought up at random times, unpleasant times and times that frankly aren’t super-appropriate so maybe in front of other people when it may be a more private money conversation. And so I really encourage you to move into a more beneficial area to diminish that risk, really time-blocking your conversations. Keeping them short, keeping them brief, so a money talk of 15 minutes, 30 minutes and, again, focused on that agenda item, a beginning and an end so at the end of that time you’re really trying to move toward some common ground, or decision, or at least some understanding with one another.

The last item I see in terms of a risk when it comes to money conversations is at the end of them there is no real action and no real accountability: Who is going to do what and when are they going to do it?  And so what can build is resentment, especially if one person feels like the other made a commitment and that commitment is never realized. But when I have conversations with people who have engaged in, in that dialogue and feel upset at each other oftentimes the other person didn’t understand that that commitment was something that they were supposed to follow through on and that there was a time period associated with it.

So to get on the beneficial side I really encourage you to create a very action-oriented conclusion. Who is going to do what? And when are they going to do it? And does everyone agree to that commitment? And oftentimes it’s best to document it in some way, shape, or form collaboratively together, so that you can all understand what path you’re on and how you’re going to get there.

So to summarize those actions, the first thing I would do is really create this idea of preparation for the conversation. So make sure you’re in the right headspace, the other person you’re talking about money with is in the right headspace, and evaluate the risks and the benefits involved in that dialogue. If you feel the risks are too great perhaps it’s not the right time to engage in that topic or that money conversation and maybe you could all agree, all agree that it’s not the right time. But perhaps it is; you feel like you could all engage in it productively.

The second idea, agenda. Make it very clear what the topic of conversation is and why that conversation needs to be had, so very purpose-driven.

The third, make sure there is a beginning and an end to the conversation. Don’t let it go on and on or come up at random times. Say this is when we’re talking about it. Let’s have the dialogue. Make the space to do it.

And the fourth one, make it very clear what the actions are. Who is going to do what and when, and make sure everyone feels accountable and that in that follow-up no one was confused about what had to be done.

So in this idea of risks of talking about money they are real. What I hope is that in those action items I just laid out, they help you diminish those risks and move more toward the benefits of talking about money.

And when you think about those benefits and reframing from risk to opportunity another idea for you, and I’ll close with this, is for you to carefully evaluate the human beings that you’re engaging with around money in three specific domains.

The first is their age. So with a partner or a spouse often times, at least in an age domain, you’re in a similar stage or age of life because you’re partners and so it may be easier to have that money conversation—I’m not saying that’s always true but that can commonly be true. However, with children, or with parents, or grandparents that can be less true. So always thinking about age because age brings a different perspective and context to money conversations both with experience all the way to think of it as readiness and concepts and learnings. Be very cognizant about the age appropriateness of the conversation that you’re about to engage in.

The second one is really this idea of psychological readiness. So it’s not just about age but is the person that you’re talking with really psychologically ready to engage in the dialogue you’re about to have?

And just to give you a quick tangible example when you think about talking about your balance sheet, huge dollar amounts with another person, sometimes that can be really overwhelming information, especially if you have expectations of them to help you manage that money. Especially if you have expectations that they will do certain things with that money and it’s the first time they’ve ever heard of it. Or perhaps they’re not even prepared to really understand those dollar amounts, the structures the money is held in. Whatever that is, be sure that they are prepared psychologically to take in the information you’re giving them.

So first is age, second is psychological readiness, and the third one is really evaluate the need to have the dialogue with the other person. If there is no need to have the money conversation you really have to ask yourself why you want to have it. And if it’s going to make you feel better, perhaps that’s enough of a need but really thinking about the integrative opportunity. What is the recipient going to get out of it, of that conversation? What are you going to get out of it? And is that something that’s a win-win situation that can really be beneficial to evaluating whether the risks outweigh the rewards of that money talk?

So with that I really hope that you have much less risky money conversations and much more beneficial ones in the future. , So hopefully we reframed some of that today and that you go forth and prepare for those money conversations you’re going to have to lead to better financial outcomes.

That was it for this episode of the About Money Podcast. Please email us with ideas or topics that you’d like us to address at AboutMoney@wellsfargo.com. If you really liked the episode, share it with your family, friends, or anyone who listens to podcasts. Wells Fargo About Money is produced by Wells Fargo. I’m Michael Liersch asking you to talk about money today.

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