Why we need to talk money

Talking about money seems to be one of these unbroken taboos of our generation. Thanks to the cultural revolutions of the 60s and 70s previously unspoken topics such as sex and drugs have become acceptable to discuss at the dinner table, well sometimes at least.

Black girl shhhh 14082014The recent social media revolution opened up our emotional and intimate lives to a global audience. We are happy to share every single moment of our day, our relationship status, our political believes, and of course, millions of images of our precious children (and cats).

However we still feel awkward talking about money. Very awkward. A recent study called "Money Talk" published in the UK by Home Start, the leading UK family support charity, highlights this very issue:

  • Almost 1 in 3 (29%) of adults say they would feel awkward discussing their earnings with friends and family
  • Almost 1 in 5 (18%) believe it would be impolite to talk about money
  • 15% say they would feel embarrassed talking about finances
  • Over 1 in 5 (12%) say they would feel insecure when the subject of money comes up
  • Almost 1 in 5 (18%) say they would feel uncomfortable if a friend wanted to discuss financial concerns with them – the same number who would feel uncomfortable talking about a major illness
  • 1 in 5 (20%) adults say they don’t know how much their partners have in savings
  • Just over 1 in 10 (13%) of adults are not privy to their partner’s salary

Our cousins across the pond don't seem to be doing any better. In an article called "The Last Taboo: Why Nobody Talks About Money", Reuters reports on a Wells Fargo survey, that:

"44 percent of Americans point to personal finances as the most challenging chat anyone can possibly have. Even the existentially terrifying topic of death, comes in second at 38 percent."

It cannot therefore be purely down to British conservatism and any reluctance to discuss personal matters, because Americans do like to talk and they have the same problem. 

It's definitely something to do with money.

It might be that in the materialistic world we live, money has become a proxy for status, achievement and overall personal value.  Because it is so easy to measure, we feel judged and can judge. Health, attractiveness etc are all things that are somewhat (emphasis added) beyond our control so in judging achievement, money may be the obvious measure.

However when it comes to kids, talking and learning about money seems to have great benefits.  A recent study published by the Money Advice Service confirms that financial habits are already set by the age of seven and highlights how the parents example can be fundamental in providing them with the necessary tools to navigate a more and more complex financial existence.

Talking about money and teaching kids healthy financial habits, seems to have positive effects on every child across the class spectrum.

As reported by The Wall Street Journal, low income families that are good savers can expect a larger portion (71%) of their children to move up the economic ladder in only one generation, compared with low income families that don't save (50%).  Opening a very small college or university savings account increases significantly the chances that the child will attend.  After all, as Charles W Eliot, Harvard professor and a former US Treasury secretary writes in the Financial Times, "The rich have advantages that money can't buy", suggesting that differences between the rich and the poor might not come from mere monetary wealth but more importantly from cultural habits that can easily be learnt with little cost.

At the opposite end of the spectrum, many wealthy children suffer greatly with addiction and depression as a result of the over-generous financial provisions from their parents. These can remove any stimulus to work and build something for themselves. There has been a lot of noise in the press recently relating to a number of rich celebrities that have decided to restrict, if not almost completely deny their children, any inheritance. Warren Buffett, Sting and Bill Gates are some of the most well known, but more and more are following the example. Even the traditional army of US "Trust Fund Kids" has seen a whole list of restrictions and covenants added to their contracts, aimed at controlling the way the money is used.  Some trustees are now instructed to release money later in the child's life and often with conditions (starting a business, donating to a worthy causes).  Goodbye sex, drugs and rock & roll life, it seems.

In the aftermath of the financial crisis, many academics and policy makers have pointed the finger at the poor public knowledge, understanding and care of financial matters. They claim this has been responsible for driving armies of people to the toxic cocktail of over leveraged mortgages, credit cards overdrafts and excessive student debt. In an attempt to transfer financial responsibility back to the people and away from institutions and government bodies, financial education will become part of the national curriculum for UK secondary schools, starting September 2014.

Perhaps the "last taboo" is about to be broken by the upcoming generation, so expect to do a lot more talking about money.  A lot is moving and changing in this area and HootLoot is a part of this process.



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