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We need to talk about ... money

We need to talk about ... money

by Michelle McGagh Jun 09, 2017 at 11:12

We all use it, we all need it, we’ve all made mistakes with it and quite often we don’t feel like we have enough of it; so why is money still such a taboo topic?

Unless it’s discussing your house price (or your neighbour’s house price) then Brits typically don’t want to talk about money. Unlike our American cousins, who seem to be quite happy discussing their pensions and investments, we have a tendency to shy away from discussing our finances.

Maybe it’s a hangover from a more paternalistic era where your employer would look out for your pension, you knew the state would have your back when you retired and people on modest salaries could afford to buy their own homes.

All that’s changed and the responsibility for financial security very much falls on the individual’s shoulders and the burden of it weighs heavily thanks to high house prices, student debt and insecure job prospects.

As the world has changed, so must our attitude to money and our willingness to open up about our finances.

We must stop brushing these important, but admittedly difficult, discussions under the carpet. And they are difficult discussions because money is a very emotional subject that brings up a whole range of feelings: it’s not purely about maths and economics and your feelings towards money aren’t always rational.

Money isn’t just about maths and economics. You may feel embarrassed because of a lack of knowledge, because your don’t really understand what the stockmarket is for or because no one has explained to you why you should or how to save into a pension so you carry on ignoring it.

People are reluctant to put their hand up and say ‘I don’t understand, can you please explain’, even though most people haven’t formally been taught about money, the stockmarket or pensions and only have cobbled together (and sometimes ill-informed or out-of-date) information from our parents to go on.

There’s no shame in admitting you don’t understand and trying to find out more.

And while we’re on it, shame and guilt are two other emotions tied into our relationship with money. Let’s admit: we’ve all been rubbish with money at some point and we all have something we spend too much money on.

My spending is well documented thanks to my No Spend Year book. One figure that always stands out for me is the £400 I spent on coffee in just one year. That’s ludicrous and embarrassing, and shameful. I did feel guilty but at least I put my hand up and said ‘I made a mistake in spending that much money on coffee, let’s sort it out’.

By airing my own money mistakes I found people came to me and quietly told me about the mistakes they were making, confessing the silly things they’d wasted money on, and asking questions about finance.

And it’s a big ask to get people to open up about money; people will talk to you about religion, sex and politics but ask them how much money they have in their bank account or how much debt they have, or whether they have an emergency fund and they shut down.

People would rather spend money they don’t have, racking up debt than admit to their friends that they can’t afford to go out. They prefer to live in ignorance of the precarious financial situation they will put themselves in future because they don’t want to ask themselves, and others, tough questions today.

That’s exactly what needs to change because if we all have a closed attitude when it comes to talking about money, then how are we ever going to learn what we don’t know and make the right decisions around money?

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Comments  (1)

  • Alison Bundles: 

    Any thoughts on this please?

    I do not own a property but, instead, have a high dividend portfolio designed to pay my rent of £12,720 pa, together with a growth portfolio designed to cover inflation and ensure a growing capital sum. My daily needs are well covered by my family pensions so my considerations are purely on the balance of this cash portfolio (inc. ISA cover to the limits.)

    But I’m not sure I’ve got this right and would appreciate any members thoughts on my strategy. Am I being too simplistic to just cover the rent with high div payers which don’t appreciate or would it be better to find low/no yield funds which grow faster, then sell £12,720 from it each year to pay the rent? At the moment I’m inside my tax allowances. Would I still be?

    300,000 High Dividend Wealth 150 Funds yielding 4.24%pa

    50,000 Wealth 150 Growth Funds accumulating 9,384pa

    17:06 on 28 June 2017

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