There's one powerful technique for improving your finances that many people still haven't tried—and that's talking about money. Whether it's scheduling a discussion with your boss to jump start a salary boost or having a candid money conversation with your friends, opening your mouth can have a strong impact—if you do it right.
Here's how raising the cash conversation can lead to a richer life in more ways than one.
Get started with a free financial assessment.
Get started with a free financial assessment.
You Can Boost Your Salary
You know the saying, the squeaky wheel gets the grease? That’s the principle in play here. If you want a fatter paycheck, the way to get it is to pipe up.
“If you don’t bring up your request to explore a raise, you are relying completely on your superiors to notice or recognize your need,” says Richard Kahler, CFP®, author of “Wired for Wealth” and president of Kahler Financial Group. Talking to them directly gets you on their radar and ups your likelihood of scoring a bigger paycheck, as well as negotiating other money-related perks, like extra vacation days, he says.
The traditional time to broach the topic is during your review. If that’s not on the calendar anytime soon, schedule a check-in with your manager. “Ask how decisions around increasing salary are made,” says wealth psychology expert Kathleen Burns Kingsbury, author of “Breaking Money Silence.” “Express your interest in being valuable to the company and earning more money as a result.” Make your case with documents that track how you improved the company’s bottom line, like sales stats or commending notes from clients.
You Can Save Big on Nights Out With Friends
Pricey dinners and group getaways taking a bite out of your bottom line? Be up front with your friends about your desire to spend less money and suggest more wallet-friendly ways you can hang out and have fun—like hitting up a brew pub instead of an expensive restaurant or going for a group run in the park, not a boutique spin class.
If you're hesitant about bringing up money, here's a little mind trick that can help you push past the awkwardness: Imagine yourself in a friend’s shoes and how you would want to act. If your friend told you she was struggling financially and wanted to save more, think about how you would receive the news, suggests Kahler. “You would probably understand and be happy to know. Assuming the other person is a true friend, they would extend the same courtesy to you,” he adds.
Who knows—your entire group might also want to dial back their entertainment budgets as well, and they'll be relieved that you broke the ice. You won't know, though, until you get the conversation rolling.
You Can Improve Your Finances at Home
Of all the conversations we’re touching on, discussing money with your honey may have the most dynamic impact on increasing your bottom line. But it’s also the most challenging.
According to the 2016 Money Habits & Confessions Survey by LearnVest, one in five Americans has never had a serious conversation about finances with their significant other. Less than half of the survey respondents said they are comfortable talking about their personal financial situation with their partner. And 68% of Americans (and 77% of Millennials) say that money causes more tension than sex in their relationship.
Here's the encouraging part though: When the lines of communication are open and you’re on the same page about money goals, you’ll do a better job of working toward them together while supporting one another through difficult stretches and building your savings and retirement funds.
To approach the topic, think of yourselves as teammates and set some ground rules: You won't blame each other for money mistakes, you'll hear each other out about your big-picture goals and concerns and you'll strive to compromise and create realistic steps to inch closer to your goals. Make money talks a regular thing, so you don't only discuss it when bills pile up or during some other financially stressful time.
In a new relationship? Bring up money issues before you take a big step, like moving in or getting engaged. “Ideally, you want to talk about finances and money personalities while you’re still in the dating stage,” Kingsbury says. “Not only will you learn more information about the other person’s financial life, but money conversations often increase intimacy.” A great catalyst for this kind of conversation is if you’re taking a trip together or purchasing holiday gifts for each other.
You Can Get Some Objective Advice
Only 29% of the 2016 Money Habits & Confessions Survey respondents said that they would feel comfortable discussing their money with a financial advisor. We get how awkward it can feel revealing your money history and goals to a professional—you might be afraid she’ll judge you for past bad choices, or that you’ll look stupid when you ask her to explain the basics of a 401(k).
But if you feel stuck about how to prioritize your goals for the future or can't seem to get your budget in shape no matter how many times you've tried, it might be time to consult a pro. Otherwise, you might be missing out on an opportunity to learn more about the basics of financial planning, like which credit cards to pay down first and how to unload more student loan debt. “The very act of talking through a financial issue with someone you trust helps you get to a clearer place,” says New York City–based financial therapist Amanda Clayman.
The more you converse about cash with those in the know, the more well-versed you may also become about investing, saving for retirement, building equity in a home and other ways to grow your net worth. “You’ll have better conversations with your financial advisor about what you need and what your values and money mindset are,” says Kingsbury. “That, in turn, will increase your ability to save for the future and invest according to your goals.”
You Can Pass Money Smarts on to Your Kids
An amazing 39% of parents haven’t talked to their kids at all about finances, according to the 2016 Money Habits & Confessions Survey by LearnVest. Yet considering that most schools offer zero courses in financial basics—and 75% of teenagers rely on their parents for their money education, according to a 2015 study by H&R Block—moms and dads who don’t discuss saving and spending may be preventing their kids from building money smarts as they grow. They may even be leaving them cash-dependent on their parents during their adult years.
“Sharing with them your values and how you spend and save accordingly is an important lesson that will help them become financially prudent,” says Kingsbury. Whether your kids are in preschool or high school, she suggests taking advantage of age-appropriate “teachable moments.”
For example, if you’re filling up the car with gas before dropping your child off for soccer practice, show her the price of gas and ask her to figure out how much it costs to drive her to school and practice each week. When she gets a cash gift from a relative for her birthday, explain to her why it belongs in the bank. Show your teen how to balance a checkbook, old-school style. What kids pick up about money now can have a big influence on how they handle it in the future.
We know money isn’t the most comfortable thing to talk—or even think—about. So we’re here to help! Save your goal and we’ll help you stick with it at learnvest.com/havethetalk!
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.