Why We Need to Talk About Money and How to Get Started
Are you on track to have enough money by the time you are in your mid-50s to retire when you are ready? If you aren't, what choices had you made that had prevented you from reaching that number?
Our questions aren't about your "number" - the amount you had saved so far - they are about your strategy. We have asked the above questions countless expats about their finances - how they feel about them, what they know about them, and how they manage them. Some of the stories shared with us were from financially savvy, informed, and empowered people. Others were not. Some stories were incredibly self-critical. There was shame, embarrassment, and guilt, often driven by a lack of knowledge. So much judgement! Yet, all of these conversations have centred on strategies, not amounts. Tools, not guilt, will lead us to empowerment.
We have spent our entire career working for financial institutions-understanding how money works has always been our passion. Yet, in our early years, we made our fair share of personal financial missteps. In the late 1980s when the financial markets crashed, we lost my job, along with thousands of other people. We made a good salary but were living hand to mouth. We saved for our pension but did not have an emergency fund. We ended up having to cash out our pension plan to meet our expenses. That was a huge mistake.
In fact, not having an emergency fund, and cashing out our pension plan ranks very high among the worst financial mistakes a person could make. We had to pay a penalty and we were taxed on the amount we received. The net amount was not meaningful compared to what it would be worth today if we would kept the money invested.
Once we landed a new job, we decided to educate ourselves. Keep in mind, we worked in finance. We were surrounded by money talk all day. However, our area of focus was the Asian stock markets and we worked with expat clients. Our market knowledge had little overlap with personal financial knowledge. We wanted to achieve financial independence, which we define as being in a position financially to live the life you want to live, whatever that looks like for you and for the people who rely on you.
We Need to Talk About Money
Many of us are raised to believe that money is not an acceptable topic of polite conversation. We often learn from our parents that it is a taboo subject. Maybe when you were young, you asked your dad how much money he made or how much the house cost, and you were shot down for asking. Perhaps your parents were uncomfortable about their money because they had a lot (or not enough), and didn't want to talk about it, let alone teach you how to manage it.
Having spent most of our career in finance, we can say that men who work there talk about four things - what to have for lunch, relationships, sports, and money (not necessarily in that order!). It's a fluid conversation. If they don't know the answer to a money question, they'll ask their buddy. Not knowing or not understanding is not a slam on their manhood-no shame. As a result, they routinely ask the questions they need to ask, and they are comfortable with taking a stab at trying to manage their own money.
Most women are very comfortable talking about their children or marriage at some level. We commiserate, we share stories and solutions. We hold each other up through tough times. We know it takes a village.
However, we rarely share how we manage our financial lives. We are often entirely in the dark on how our parents are planning to fund their retirement. Some of us don't really know how much we have for retirement because we've let our spouses manage it. We wonder how our friends are funding their kids' university/college plans. How do they manage their family finances - do they have a joint account, or separate accounts? We need to ask these questions and hear the answers because if we don't, we can be blindsided by events.
Note: none of these questions are about how much money anyone has. You're not asking for numbers; you're sharing strategies and knowledge.
How to Get Started
Start with a trusted friend, somewhere comfortable or familiar. Go for a hike. Open up the conversation by saying that you don't want to know actual numbers, but are asking about strategy, because you wonder how you could do it better.
A few starter questions:
- Can I ask you a personal question about how you manage your family finances?
- How are you and your partner thinking about retirement?
- Do you have individual retirement plans? How do you talk about it? Have you shared your numbers with each other? Do you have a coordinated plan?
- How are you managing saving for retirement and university/college?
- Are you expecting your kids to contribute to their college education or will others in your family help out?
Consider Practicing with a Coach
Last week, an expat came to us because he had no idea how much he and his wife had saved for retirement. He was anxious because his wife kept putting him off whenever he asked about it. We worked together to come up with a list of questions and practiced some responses so he could get comfortable.
His initial questions to his wife were met with a bit of hostility. Her first response had been, "Why the sudden interest?". Then, "Why are you asking?". Other responses from other expats we have coached include things like, "You wouldn't know what I was talking about anyway," or "Why do you want to know now after all these years?" and "Don't you trust me?".
We practiced responses together. After some practice he was able to respond with, "I'm asking because I'd like to understand our finances better. You've done all the work for a long time, and I'd like to help share the responsibility of managing our money."
This is about opening up the money conversation so you can begin to fully engage in your financial life. You have the ability to take control of your financial life and seek what wealth means to you. It begins with this conversation.