Learn to navigate difficult money conversations with employer, family and friends
Have an open conversation with your partner about how money will be earned, spent and saved by the household
A nosy relative comes up to you at a gathering and strikes up a conversation, which soon enough veers towards what you do for a living and how much you make. Sounds familiar? Most Indians are not shy when it comes to talking about money casually, and yet there is a sense of taboo when it comes to discussing how you manage it. We tiptoe around children and older relatives when it comes to discussing about money. Similarly, there’s a lot of discomfort involved in asking a friend or relative to return the money we lent them.
“Most of us saw our parents discuss money in private, and imbibed the habit. It relates to the fact that money-mindedness was generally frowned upon, so money was considered a private affair," said Deepali Sen, a certified financial planner and founder partner of Srujan Financial Advisers Llp.
But talking about money is not only inevitable, but also crucial for a person’s financial well-being—whether it’s talking to your employer, your parents, your children or even other family members and friends. We tell you how to negotiate those difficult money conversations.
With your employer
You may tell yourself that you work for job satisfaction, but the bottom line for most people is the money you earn. So however uncomfortable you might be talking about money, it’s something that you must do when looking for a new job or during your annual appraisals.
Talk to peers on internet forums to get a sense of how much you can expect, but it might be difficult to find exact numbers. According to Sen, the conversation should be geared towards what you bring to the table rather than what you expect to be paid. “When negotiating the pay for a new job, list the skills you bring to the table and the value you can create. Even if you have a number in mind, instead of mentioning the exact number, say you’ve found that is the industry standard," she said.
If the gap between your expectation and the offer is too huge, you may want to look for something more suited to your needs. But have realistic expectations. “Given that job security is fast becoming a thing of the past, make the most of your time and talent by earning appropriate compensation and at the same time, enhancing your skill set or making in-roads in a certain network," said Shilpi Johri, certified financial planner and founder of Arthashastra Consulting.
Talking to your parents about money can be sensitive. “The topic should be brought up in a straightforward manner. Dependant parents should be made aware of the professional and monetary situation of their children so that they do not have any undue expectations," said Johri.
Sen recommends using humour to ease the introduction of difficult topics like writing a Will. “Children are best placed to understand what their parents will be open to accepting. In some cases, having a light-hearted conversation eases the process. In others, it might be better to be upfront. I sometimes use a spiritual metaphor to bring it up with clients, saying that tying up all worldly loose ends, like bequeathing their assets before they pass on, makes for a peaceful journey to the afterlife," she said.
You may also need to support your parents financially. “The idea is to offer help, not to find out what will come to them as inheritance, so be careful to steer the conversation as such. But if the parents are uncomfortable in sharing, it’s best to leave it alone, because a degree of financial privacy needs to be maintained," said Amit Kukreja, founder, Amitkukreja.com, a financial planning website. He added that in joint families, the need for candidness when it comes to finances is much higher, since income and expenses are often shared.
With your spouse
Transparency and mutual trust is the key to making any partnership work. But in many Indian marriages, one partner, usually the man, takes up the responsibility of keeping track of finances. This is an unfortunate legacy of the traditional stereotype of men as breadwinners and women as homemakers. This can easily lead to financial secrecy by one partner, which can be a problem. “Imagine emergency situations like an accident, ill health or death. Financial secrecy can be disastrous in such cases. Besides, it may create unnecessary rift between couples," said Johri.
Kukreja said like other household and familial responsibilities, money matters should be dealt with jointly by couples. “Even if one partner is not earning, both should know how resources are being earned and spent," said Kukreja.
You can choose to combine your finances with your spouse or keep them separate, or even take a middle path, but the key to making it work is to have an open conversation about how money will be earned, spent and saved by the household.
With your child
The cultural baggage we carry around money conversations affect children the most. “We try to shield our children from ‘ugly’ money talks. As a consequence, they are uncomfortable talking about it when they grow up," said Johri.
Then there are other social constructs. “Culturally, parents are programmed to fulfil all the financial requirements of their children, so they don’t feel it’s appropriate for them to discuss their finances with them. This needs to change. In order to make the child more aware about money matters, parents need to explain how financial resources are being mobilized to help them achieve their educational milestones. But these conversations should happen in a guilt-free environment," he said.
Even for higher education expenses, the conversation should be direct. “If you are borrowing for the child’s education, explain to them that you will be paying back part of the loan, and once they graduate, they can pitch in by paying off the rest," said Kukreja.
Many parents continue to provide financial support to adult children, and this can be damaging. Financial care-giving can inhibit your child’s capability to function as a financially independent adult, and dent your retirement corpus. Be clear about cutting off the financial aid once your children start earning so that they don’t have undue expectations.
With your friends
It’s easy to feel obliged or pressured into lending money to a loved one. But conventional wisdom says that if you lend money to a friend, be ready to lose either the money or the friend. While this might not be true in many cases, understand what you are getting yourself into and don’t cave to peer pressure
Before you lend, take stock of whether you can spare the amount if it is not returned for a long time.
If you do lend money, asking for the money back can be one of the most difficult conversations to have. According to Johri, the key to addressing this is to stop feeling embarrassed about your own financial well-being. “Money does not come easy, and most people have to work hard to earn a decent amount, and that should be respected by everyone," said Johri, adding that there needs to be a distinction between doing something out of love and doing something as a financial transaction. “If it is the latter, it should be properly communicated without holding back—be it friends or relatives," she said.
If expenses are to be split between friends, Sen recommends setting the rules ahead. “For joint expenses, like going on a trip as a group, assign someone in the group the job of being the accountant. Either pool money in advance and spend out of that kitty, or let them keep track of what is being spent and send reminders to the group so that the accounts can be settled. This ensures that people don’t delay paying and misunderstandings don’t happen," she said.
You may or may not be comfortable talking about money, but it’s important to get over the taboo and address the elephant in the room.
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