Ed Monk: Few of us can say that we haven't, at some time or other, felt bad about the state of our finances. Whether it's anxiety about debt, about financial security in the future or loss of income, money has the potential to be the cause of much stress in our lives and can even lead to depression and serious mental health problems. That's why talking about our financial anxieties is so important. So, who can you talk to about money?
I'm Ed Monk and, to discuss with me how we can have better money conversations, I'm joined by Iona Bain, a financial expert, a writer, a broadcaster, and the founder of the Young Money Blog. Iona, welcome along. Why don't I start by asking why it is that you think we find it so difficult to talk about money?
Iona Bain: Well, money is the ultimate elephant in the room, right. It plays such a profound role in our lives, often in ways that we don't like to admit and over the course of our lives, we develop this incredibly complicated relationship with money.
It's influenced by our upbringing, our values, our socioeconomic status, who we spend time with, how we deal with our emotions. So many different factors that can be very difficult to untangle and when we start talking about money, we invite uncomfortable questions about the way we live and the choices we make.
It might bring up bad memories from our past and it forces us to look at our shortcomings, our weaknesses, our insecurities, and that can be a difficult and painful process and it can leave us feeling very vulnerable.
I think that can be hard enough to deal with if we're in a relationship or friendship with someone where we can be open and honest with one another but perhaps that's not always possible and it's understandable that many people just don't want to go there, they don't want to open up in that way and maybe they've been taught as they were growing up, that's it's just best to get on with it. Muddle through and don't be a burden to anyone and things will be okay, things will work themselves out.
Maybe they've learned that talking about money is odd, it's not very polite, it's a bit crass, it's vulgar and maybe people feel like, if they open up, they'll be judged or shamed, and they'll end up feeling very guilty about the things that they've got wrong in their life.
So that's why it's such a sensitive subject and why we all need to be really thoughtful and careful about how we approach it.
Ed Monk: Yes, and you mentioned the word status there and that's something that sort of jumps out at me as well. I think there's people, all of us maybe, on some level, treat money as a scorecard for life, about how well we're doing, or badly and that's not always a healthy thing. It's an understandable thing obviously, but perhaps if people have anxiety around money, as you say, it can be quite revealing to admit to those anxieties because it means that you're not necessarily happy with your place in the world.
Iona Bain: Yes, absolutely and I've talked about it in the past as being like a bit of a monster almost, and it's there all the time and it's very difficult to ignore. It's a pressure that we feel in our life to do better, to be more, to earn more and we feel like our inherent value as human beings is wrapped up in how much we earn. Then how we can spend that money to show our status.
We all know that that's not very healthy and that that isn't going to necessarily improve our relationships and our sense of well-being. I think it's partly because we have evolved to use money to make ourselves feel better as well, and I think it's partly about how our brains work. We developed over the course of our evolution these quite rapid emotional responses to situations, which can be helpful in some ways, especially when we're under threat but often it can be a very unhelpful way to look at money because we need that cool rational part of our brain to kick into the gear. The prefrontal cortex. That's when we can make better decisions, but unfortunately, it's quite slow to fire up. In the meantime, we just end up making quite emotional decisions about money and that's why we end up spending, really just to make ourselves better.
Ed Monk: In other areas of our lives, we might have friends and family that we can turn to, to talk about the tough things that happen in everyone's life. It seems with money there's a higher chance that those people, maybe they're going to be impacted, if you've got a money problem or anxiety around money, it can be hard to admit that to them because it might impact upon them. If you're telling a partner about, say a debt problem, that's hard, in a different scenario you might have someone who's actually unhappy with their work and their occupation, but they need to earn money, they think, because of their family and what have you. Some of these people that you would normally turn to, maybe it's extra hard to turn to them.
Iona Bain: Absolutely, there are two components to that. There's the practical complications and the personal complications.
Somebody who you are in a relationship with, as you say, your decisions will impact them and therefore if you admit that you're having money problems it's natural that they're going to think does this affect me. So they may not able to have that dispassionate view as they would like, but then also that person cares about you, right, they want what's best for you, but that might also cloud their judgement because they may want to just make you feel better.
I've had that situation with people where they'll be very quick to offer solutions. I had an ex-boyfriend who started every sentence with, 'What you need to do is this...' and he would be instantly in problem-solving mode.
Ed Monk: Yes, and you don't need that, right.
Iona Bain: No, not always. Sometimes that's helpful and sometimes that can kind of calm you down and make you feel like there is a way forward. Sometimes you just want someone to listen to you and to acknowledge that you are going through a difficult time and that sometimes there aren't easy answers, money is not a straightforward subject, it's always changing.
Ed Monk: One area, I guess, which we should spend some time on is the issue of debt because that's going to be the cause of the most acute financial anxiety you would think, and in particular, problem debt, I guess where repayments are becoming unmanageable for people. What are the specific do's and don'ts for people in that position?
Iona Bain: Firstly, don't be afraid to get help.
It's very easy to bury your head in the sand and think that that's a problem that you'll just deal with another day, but if you start now, then you can get yourself on that journey towards greater peace of mind as well as solvency.
So you can talk to a debt charity like StepChange, National Debt Line, or The Money Charity where you can get free debt advice, you don't have to pay for debt advice remember, and those charities are all very experienced at dealing with people who are in your situation. They're not going to judge you; they are going to have the experience and emotional intelligence to be able to make you feel better about your situation and nobody who gets debt advice ever regrets doing so. The only thing that they think is, I wish I'd done this sooner.
Ed Monk: Yes, and that conversation that you might have, maybe with an expert but also with anyone really. You don't have to have a plan straightaway but just having that conversation is the first step on that journey as you talk about.
Iona Bain: Yes, a journey of a thousand miles begins with one step.
Ed Monk: Well, debt isn't the only area of our lives where we can have financial anxiety of course, any of us can feel the pressure to meet financial goals and we all worry from time-to-time about the future. I wanted to talk about people that may be worried about, even if they're not in debt, they might be worried about other financial priorities, saving for a house, paying for children, which is an expensive business and saving enough money for their retirement of course. We all get bombarded, don't we, about how much we should be doing towards those aims and how difficult it can be.
Iona Bain: Yes, so one of my mottos here is, it's good to be aware, but it's not good to be anxious.
I think we all have to manage that balance between being informed about what's going on out there in the economy and how it affects our finances and not letting that tip over into overwhelm. Getting to that point where you feel so daunted and demoralised by the news that you end up being completely paralysed and not able to take any action, that is not a healthy place to be.
Working in the media, I understand that we, as journalists, want to report wrongdoing, we want to hold companies to account, we want to tell people what's going on, but I think sometimes we end up scaring people about the future, and we end up making them feel like there's very little that they can do to improve their own prospects and that's not good. We really need people to feel like they do have choices and they have the ability to be able to then manage the things that are in their control.
Ed Monk: Yes, a very typical conversation that I've had with people over the years is that they might be, not decades into their career but they've established a job and a career and other financial priorities have been taken care of, but they haven't started, for example, saving for retirement.
They're a bit embarrassed about that, and they can see the headlines telling them that they're heading towards a retirement in poverty and it causes, as you say, a kind of paralysis where they won't do anything about it, and it's important that they understand that they're normal, that loads of people are in that position and that starting to save and starting to plan for the future, whenever you do it, is really, really, really valuable. Even if you think you're only going to be able to put aside very small amounts and it's not going to amount to anything, it really, really will, and it gives you something to build on in the future.
Iona Bain: I could not agree more, and I think we need to move away from the negative narrative that you spoke about just there, whereby people are made to feel like they're not saving enough and whatever they do they are going to be destined to have a poor retirement.
We need to move away from because it's incredibly unhelpful and it might then make people feel like there is no point starting now because that money could be put towards other things. It could be put towards enjoying yourself in the here and now or towards your first home and so on.
I think one of the most important things to remember about having a healthy relationship with money is that it's about thinking both in terms of your short-term goals but also the medium term and the long-term and keeping all three of those time frames in your head and that's hard to do but if you can juggle those, then you are going to feel much better actually, because you are going to know that you are taking care of the future, that it isn't going to just come up and surprise you and actually, it's not a case of, I'll deal with that when it comes.
Ed Monk: Now, I wanted for us to talk a little bit about some of our personal experiences maybe that we can bring to this around conversations about money and about finance and where perhaps it hasn't always worked.
For my own part, we've got a situation in my extended family right now where we have a very elderly relative who, people in the family are running around trying to sort her affairs, frankly near the end of her life, to get her affairs in order.
Honestly, had certain conversations taken place ten or 15 years ago, just about her wishes and around priorities and how things are going to be arranged from the family's point of view, it would have saved on so much hassle, so much heartache now.
It's something that I think has been a big lesson to me about having conversations that might be difficult, particularly when it comes to parents and children and as parents get older, those conversations can be quite difficult to have, because there's all sorts of different statuses flying about there. It's a difficult conversation but it's one that I really wish we'd had. I wonder if you'd had anything similar.
Iona Bain: Yes, I have actually, so recently I've been discussing family finances a lot with my parents, we've made some very big decisions as a result. So they're going to move much closer to me, so I can help them out, and they can help me out if I end up having children one day.
They're looking to buy a property that would also be suitable as a future family home after they're gone and they're keeping me in the loop about their plans regarding their pension and their will, they regularly update their will and they let me know what they put in there, so nothing's going to come as a nasty surprise. They're not going to pass on all their money to the local cats' home or anything, so that's good.
Also, my dad is keeping me in the loop about how he manages the family finances, he's telling me where he keeps all his financial documents, what his passwords are, and so on and that makes me feel like, at some point, he needs to pass that information on to me, then it's not going to be an epic task. I'm already going to be in a good position to take over, whenever that comes.
Ed Monk: Okay, and finally then, Iona, you've written on why these conversations can be so difficult to have. What can people do on a practical level to talk better about their money worries?
Iona Bain: So, think about when, where, and why. If you choose the right time and place to have the conversation, then that can make all the difference. Think about a time that's convenient for the other person, when they're likely to be feeling well rested and calm, as opposed to stressed out and busy, and think of somewhere that's private or at least where you won't be overheard.
Personally, I'm a massive fan of walking and talking. I find that getting outside, having a bit of exercise, being in nature, and walking next to someone, as opposed to sitting opposite them, it really calms things down and it takes the sting out of what could be quite a difficult conversation.
It's really important to lay the groundwork with the other person and explain in advance that you want to talk about money, so you're not bringing it up out of the blue, and that person can feel mentally prepared.
Then explain why you want to talk to them. It might be that you feel that you can open up to them, that you want to increase trust between you. You want to strengthen the relationship. Saying all that can really inspire confidence and make the other person think, oh, okay, this is a good thing for us to do. It shows that this other person cares about me and respects me.
Consider where the other person is at in their financial journey. If this is your first conversation about this subject, you can't expect to sort everything out in that one conversation. It's going to be a process, and so that initial chat could just be about putting the other person at ease, admitting there's a problem or issue that needs to be addressed, and then thinking about how you can tackle it together, and keep it positive as much as possible.
Give them that positive reinforcement and help them feel like they're doing the right thing, because that will really pave the way for you to have these chats on a more regular basis in the future.
In terms of how you might open these conversations, think about going in softly, maybe by mentioning someone you know who has had a similar experience to the one you want to bring up. You might see a news story, something on TV or in a book, that's relevant, so you could use that as a trigger, but sometimes the more direct approach can be better.
Just saying something as simple as, 'I've got something I'd like to talk to you about that's been on my mind, if that's okay,' or, 'I have something I'd like to talk to you about which I think would help us reach our goals,' or, 'I need your help with something. Do you have a few minutes to talk?' or simply, 'I'd really love your opinion on this.'
You could start with a pretty open-ended question to gauge how the other person's feeling. You could ask, 'How are you feeling about your financial situation or our financial situation right now?'.
It's important to remember that conversations are two-way. Make sure the other person is involved and not just listening - that you're not talking at them for half an hour, and try not to interrupt, so that you can both contribute.
Stay on topic. Don't go off on tangents that might be interesting and important but not necessarily relevant.
Most importantly, take the judgement and negativity out of things. Avoid starting sentences with any accusations and saying, 'You do this,' or, 'You think like that.'. Instead try, 'I think,' and, 'I feel,' to help the other person understand where you're coming from, and don't be afraid to refer them to other resources as well such as MoneyHelper, which can help them find out more and increase their knowledge, so they feel more confident.
Ed Monk: Indeed, well, Iona, we've covered absolutely loads there and I'm afraid that is all the time we have today, thanks so much for joining me.