Why We Don’t Talk About Money (and How We Can)
Thanksgiving and the holidays are around the corner. Oftentimes, thinking about families gathering around a holiday table engenders memories of both perfunctory and controversial conversation – how quickly can you recount the last time your family had a political discussion around the Thanksgiving table? Likely, quickly. What about the last time your family discussed money? This may take longer to recount – your curiosity sparks as you ponder why…
A study conducted by Empower found that “66% of Americans believe open conversations about money are the key to financial freedom…and they are constantly planning (64%) and dreaming (58%) about their future and thinking about finances (61%) – but that’s where it goes silent” (Empower). Why is this and what can be done to thoughtfully reverse this trend?
Key Drivers: Why Do We Not Discuss Money?
- Generational Differences: Empower found that “Millennials (56%) and Gen Z (49%) are less guarded with money topics compared to older generations (38% Gen X and 22% Boomers).” There is a clear chasm across generations. This may manifest differently: for example, one generation may become irritated if a rising generation asks about finances. They could find this presumptuous, especially if the rising generation approaches the discussion from the lens of ‘what will I get’ in place of ‘what is expected of me?’
- Discomfort: Would you be surprised to learn that people would prefer to speak about politics (43%) and death (32%) over their finances? (Empower). This preference may arise from the different upbringings family members have had. Were they raised in a wealth creating or wealth preserving generation? Can they contribute to creating or preserving the family’s wealth given their qualifications? The answers to these questions may trigger apprehension and negatively affect one’s comfort level in discussing money.
- Concern Over Negatively Impacting the Rising Generation’s Values: Older generations with full transparency into their family’s wealth might fear: will sharing about the family’s wealth lead the next generation to not work as hard? When the next generation inherits money, will they be responsible stewards of the family’s values?
At Wingspan, we recognize these are fears families have, but we also recognize that any fear can be surmounted through a thoughtful approach and governance construct.
Recommendations: How Can Your Family Discuss Money?
- Create the Rules of Engagement: We advise families to set a time and neutral place to discuss money. With this, it is important to provide an agenda and communicate the goals of the meeting. For the first meeting, create norms to enable fruitful discussions. We recommend norms anchored in encouraging each person to have a voice, assuming best intent when questions or concerns are shared, and codifying key decisions and action items for clarity and to enable continued conversations and progress.
- Discuss Money Incrementally: We recommend families start discussing money as early as elementary school with children; building a financially responsible mindset requires knowledge and repetition. When money is discussed, recognize that there is a varying level of knowledge around finances. In turn, it is important to provide digestible levels of information and to pair each discussion with learning opportunities. At Wingspan, we create educational programs for clients where we provide pre-reads to define terms that will be discussed in a meeting and build post-meeting educational resources like seminars, classes, or podcasts for all to be able to keep up.
- Create a Lasting Governance Construct: When unexpected crises occur and the next generation learns of the family’s wealth without prior conversations, they are set up to fail. They question their responsibility to their families, themselves, and society. At Wingspan, we work with families to design governance to codify and communicate the family’s legacy. We provide solutions, ranging from creating a Family Constitution to serve as a north star for understanding expectations to designing giving programs. With the right governance, we believe we can help families reverse the adage “from shirtsleeves to shirtsleeves” and set them up for generational success.