Talking About Money
Over my lifetime I have found people either talk too much about money or not enough. It’s rare people talk appropriately about money.
I have a theory:
- People who talk a lot about money don’t have as much as they would like you to think. (They are probably broke but don’t know it)
- People who don’t talk about money:
- Come from a family who had little money or were poor money managers
or
- They had plenty of money and didn’t want others to know about it.
I’d like to expand on my theory and explain what I believe is the proper balance.
Theory A
If you grew up in a home environment where money is tight you probably heard things like: We can’t afford that, Money doesn’t grow on trees, How much I make is none of your business, If we get a little extra money we can “X”, The car broke and I don’t know how we are going to pay for it, When you turn 18 you either get a job or move out, If I win the lottery I’ll…, Hourly wage or tax return money, etc.
Theory B
If you grew up in an environment where money was plentiful you might have heard things like: Not everyone can afford the nice things you have, I have to meet with my financial advisor, What college are you planning to attend? Did you see what the market did today? Where are you going for spring break? Let’s go to the lake house this weekend, John’s business had a great year, Net worth or income, etc.
Find The Right Room
Consider the saying “If you are the smartest person in the room, you are in the wrong room!” The same applies to money. If you want to be successful with money you should hang out people who have proven themselves successful with money. Their behavior will give you clues as to how you should act and what information you should divulge.
Weeding Out the Blowhards
According to my theory the people with money don’t talk too much about it. So how do find the right people to surround yourself and share advice? I was recently at a wedding reception where it seems everyone at the table was trying to out do the other. “I bought a new RV”, “I have a new boat”, “We just built a new house” and on it went until dinner arrived. I couldn’t believe all the hot air! But if you pay close attention, they give away little clues. “I received zero down on my RV loan”, “I’ll have my boat paid off next year”, “I’m looking at the new trucks when my lease runs out”. They were all broke and they just didn’t know it! They were trying to impress each other with borrowed money!
Look for the guy who sits quietly and just listens. Notice he isn’t talking about his possessions. He is probably well dressed but conservatively so. A luxury watch is sometimes a giveaway. When you ask him what he does / did for a living he will be vague. This may very well be the guy you want to get to know. Try to get him away from the group and learn more.
Appropriate Money Talk
When it comes to your spouse and kids, I believe an open honest learning environment is appropriate. Hold good discussions about your budget. Share with your kids the cost of running a household. The kids don’t need to know your full income or net worth but they need to see the process of good money management. It needs to be clear the details are not to be discussed outside of your home.
What is appropriate to discuss outside the home? If someone else brings up the topic feel free to discuss things like “We found a new budget app.”, “Saving for college is a priority in our house.”, “We like our financial advisor, I can introduce you.”. All indicate financial responsibility but don’t give away too much detail. Don’t discuss things like income, net worth, lavish spending, expensive vacations. Better to politely listen or downplay your experiences to avoid sounding boastful.
When it comes to close friends it’s often difficult. When in doubt, it’s best to say less. Financial success comes at many levels and when people learn of net worth disparity it can only strain a relationship. On the other hand, the 401-k has made many more people “investors”. Now everyone is in the stock market and wants to talk about it. I’ve had many good discussions with friends and co-workers about investing. I prefer to answer their questions by referring them to credible resources.
If you work at it you will find like minded investors who you can share investment strategies. An investment club is a great way to share these ideas. In this environment you can talk openly in percentages, not hard numbers, and be on a level playing field. It’s worth the effort to find a like-minded group to discuss finance and investing. Hopefully you can learn something from the guy with the nice watch😊
1EngineerOnFIRE