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Four Difficult Financial Conversations & How to Handle Them

Four Difficult Financial Conversations & How to Handle Them

Difficult Financial Conversations

Today’s guest post comes from Michael Perrone, who is a talented writer and publisher of Change Brothers. He has some great wisdom to share about how to tactfully approach those tough conversations about money with the people who are closest to you in your life.

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Note: The Money Mix hosts guest posts as a way to further diversify and amplify the personal finance community. We don’t agree with everything written in our guest posts, nor do we endorse the author or ideas expressed in the post. 

Four Difficult Financial Conversations & How to Handle Them

Difficult Financial Conversations

An old friend wants to borrow money; a cousin wants you to invest on the “ground floor” of his new business; a parent wants to get your kids expensive gifts you’d rather not have in your home.

Money is a delicate subject and is so intertwined with deep and personal feelings that conversations about it are filled with potential relationship busters.

We try to avoid these landmines by not talking about money or by downplaying our true feelings. We may even let people take advantage of us because it’s easier than dealing with conflict.

But falling on our own financial sword isn’t the only option. Good old-fashioned communication and understanding is always possible, even when money is on the line. Here’s how:

  • Your Friends Want to Spent Money.

Spending is social. Spending time with friends means spending money with friends! But what if you don’t want to spend money going out to eat every Friday, or to take the group trip to Vegas or get a ticket to the big game?

When you want to spend less money, but not less time, with friends, here are a few things to remember:

  • Tell them your why: Don’t just disappear or cancel at the last minute via text. In person, tell them why you can’t or don’t want to spend the money. Make sure they know it’s about your debt payoff plan or a savings goal and not about their sense of humor or new haircut.
  • Make it a group decision: If possible, avoid dramatic statements of newfound frugality. Instead pose it as a question to the group. How can they help you reduce spending?
  • Suggest less costly activities:  Find new ways to do the things y’all love at a cheaper price or with no price tag attached at all.  
  • Anticipate defensiveness: Change of any kind breeds defensiveness and worry. No matter what you do, your friends may take this personally and try to guilt you into giving in. This is a natural reaction you need to accept. Don’t be angry with them. Remember, before you ever bring it up to them, you’ve thought long and hard about what you want. Allow your friends the same mental space to do so.

The key to reducing social spending is to bring your friends along for the ride.

  • Your Young Child Wants to Buy Something

Marketers & retailers sure know what they are doing: placing the things kids want in bright, colorful packaging in prominent places all around the store. How many parents have bought a cheap toy, or a piece of candy just so little Johnny or Suzie stops crying?

The good news is, even at a young age there are ways we can talk to our children to avoid the dreaded store meltdown.

  • Make them the rule enforcers: Kids don’t always love rules, but they generally love telling other people about the rules. Before a shopping trip ask your child to remind you of what you can buy and what you can’t. Have them hold the list. Make it a game and pretend you’re going to buy something you don’t want and have the child correct you.
  • Tell them what they’ll see at the store: If you know what your child likes and what is likely to be in the aisles in a given store, tell your child about it beforehand. Soften the blow and prepare them to be told “no” and why.
  • Teach them about money: If your child is old enough, use the shopping trip to teach them about money. Talk to them about how much money you have that day and how much you can spend. This may require the use of cash instead of credit cards but it transforms a potential meltdown into a teachable moment.

Don’t let the store dictate your shopping experience with your child. Make a plan before you get there.

  • Your Relatives Want to Spend Big on Your Behalf

Some people are more comfortable buying gifts than they are showing affection or offering compliments. You may be related to one. It could be any family member wanting to buy you anything, but I most often see parents who don’t know how to tell Grandma and Grandpa to stop spending money on their kids. For the love of all that is good and decent, little Johnny doesn’t need another video game!

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With cross-generational relationships at stake, here is how you can avoid conversational disasters:

  • Practice the conversation beforehand: Before you ever speak to them, practice with someone else. This gives you a chance to visualize their reaction and hone your responses.
  • See it from their side: Practicing the talk beforehand will also give you a chance to understand their point of view. Maybe they spend money on your kids because they feel guilty, or absent or desire love in return? Do they want to be the fun grandparent?
  • Suggest a replacement: If you are able to discover what they really want, then offer suggestions for other ways it can be achieved. This could be more time spent with grandkids or buying experiences instead of things.
  • Be united: If you have a spouse or significant other, then be sure to be united before talking to other relatives. Frame the relatives actions as part of the bigger picture of what you want your kids to learn about money.
  • Your Friend Wants to Borrow Money

If I’m asked for money the first thing I do is find out if there is something else I can give instead. It could be my time, my connections or expertise. All of these can not only make a big difference, they also tend to put much less strain on a relationship with a friend or family member than a loan.

But if money is the best way to help, there is only one suggestion for how to handle that difficult conversation: Either be Javert or be the priest.

You may remember the story of Jean Valjean in Les Miserables. Valjean stole a loaf of bread and was hunted for the rest of his life by the Inspector Javert. Javert wanted Valjean to pay to the utmost for his crime no matter how long it would take to catch him.

At one point in the story, Valjean also steals gold and silver from a priest. But the priest reacts quite differently than the Inspector. He instead offers Valjean even MORE of his valuables to take as his own.

So as the lender are you Javert or the priest?  If you’re Javert, draw up a contract, stipulating repayment and all the other terms of the loan. If you’re the priest, give it freely as a gift, never expecting to see a cent again.

There’s no right or wrong way to be, but honesty and openness from the start is the best way to keep the peace in any relationship that involves money.

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