How to talk about money

Talking about finances is something that many people avoid. Perhaps it’s because it can be awkward or stressful, or you fear the worst about the state of your savings or spending. Alternatively, it could be that you’re worried about your perceived lack of knowledge.

Whatever the reason, the reality is that it’s a conversation you shouldn’t shy away from. It can impact various areas of your life – including your personal relationships and your professional development. An open and honest discussion could mean you are able to better understand your financial position and look for ways to increase your wealth.

So, how best to talk about money? Read on for practical tips and advice.

Why talking about finances is so difficult

There can be any number of reasons that hold you back from broaching the subject. These could include:

• Emotions: Money is an emotive topic. It can bring great satisfaction, but it can also cause feelings of stress, anxiety and shame if we find ourselves in a difficult financial situation. Admitting to these fears can make us feel even more vulnerable.
• Lack of understanding: You may feel uncomfortable talking about finances because you are worried you don’t have enough knowledge to be able to hold a meaningful conversation.
• Taboos: There can be a societal stigma when it comes to talking about money, as some feel it is improper or unwelcome. It is also more common to not talk about finances in some cultures, leading to some feeling discouraged from raising financial matters.

Building confidence when talking about finances

To help you overcome some of those hurdles, there are important points to remember as you continue your conversations:

• Give yourself a break: Nobody is perfect and everybody makes mistakes. This applies to you and the way you handle your finances, so treat missteps as part of your learning.
• Focus on progress: Don’t be distracted by setbacks. Instead, find your motivation from the incremental improvements you make along the way.
• Develop your knowledge: You can read books, listen to podcasts, use online resources or seek professional advice to improve your understanding. Always be careful of receiving investing tips from someone online – if you’re unsure, speak to a qualified financial adviser.

How to talk about money: Preparing for the conversation

Although these are discussions that need to happen, don’t rush into them without feeling ready. Here are a few practical tips that may help you prepare:

• Define your goals: Make sure you know what you want to achieve from the conversation. This will help you stay on track and avoid going off on tangents that don’t lead to actionable solutions.
• Get your facts straight: If you’re going to be talking about spending habits, savings accounts and essential outgoings, make sure your numbers are accurate. Bank statements and budgeting spreadsheets can help with this.
• Choose a time and a place: Life doesn’t always work to a schedule, but when you’re talking about finances it needs to be at a time when everyone involved can give it their focus, without distraction.

If you are going to be talking about spending habits, savings accounts and essential outgoings, make sure your numbers are accurate.

How to talk about money: The conversation itself

Any talk about finances is unique due to the individuals involved and your specific circumstances. But there are elements to your approach that should apply across the board:

• Be honest: For any discussion about money to work, everyone must commit to full transparency. Anything less can harm trust and can lead to decisions based on inaccurate information.
• Stay calm: Acknowledge that money is often tied to emotions but avoid getting frustrated or angry if the conversation is not going how you had hoped. You’re less likely to achieve a successful outcome if things get heated.
• Ask open-ended questions: Such as ‘How do you feel about…?’ or ‘What are your long-term goals?’ These will encourage others to engage and help you to understand things from their perspective.
• Respect differences: Talking about finances won’t always be smooth sailing. You might have experienced contrasting upbringings or may have diverse spending habits. The key is to try and find common ground.

Continuing to talk about finances

Having that conversation is a huge step, but it is just the first on your journey. For a lot of people, talking about money requires an ongoing commitment which can include:

• Regular check-ins: Whether that be with a loved one or a financial adviser, these can be held monthly, quarterly or annually and can help you keep on top of things.
• Celebrating wins: It could be hitting a savings goal, paying off a debt or sticking to a budget. No matter how seemingly minor, it’s important to mark any wins.
• Adjusting where necessary: Your circumstances can change, which means your financial situation will too. If that happens, be flexible. Talking about money more often will make it easier for you to adapt without undue angst.
• Using financial tools: Budgeting apps, investment trackers and the advice of a professional can all inform how you talk about your finances and the decisions you make.

Talking about finances with family

Our personal relationships are what give our lives meaning and joy. But talking about money can muddy the waters and put a strain on those connections. The nature and content of the conversation will be different depending on who you are speaking to.

The key to remember is that these people are important to you for a reason, which has nothing to do with money. Therefore, often the best approach is to be open and honest. As a result, the reality of talking about finances is never as bad as first feared.

Talking about money with your partner

You may share a financial goal, such as retirement or mortgage payments. Discussions around insurance, credit cards, direct debits, shared bills and attitudes to money are all subjects that will likely need covering with your partner.

A joint bank account and investing together could make sense, as could setting a joint budget for essentials and how disposable income is used. It may be an uncomfortable conversation if you need to hold your partner to account for their spending habits, but it is better to confront this together so you can plan your future as one.

Talking about your finances may also help you to create a new savings goal. For example, if you have children you may want to speak with your partner about investing in a Junior ISA.

You may find that many of your financial goals are aligned, such as those for work, travel and leisure. For example, if planning your holiday, you may want to put money aside together in a dedicated savings fund.

And you’ll have bigger shared goals such as retirement, so consider how the combination of your pensions could give you the desired quality of life once you’ve finished work. Likewise, consider your financial legacy and talk with your partner about your will and expression of wish.

Talking to your kids about money

Recent research from the Money & Pensions Service reveals that only 24% of children receive meaningful financial education at home. And it’s important, even from a young age, to teach them about the value of money. You can establish good habits with pocket money for chores and by showing how saving can lead to aspirational goals rather than impulse purchases.

If you are approaching retirement and have older children, you will need to talk about what you’re leaving behind. Explain your will and expression of wish, and it could be worth having a conversation around Inheritance Tax. Discuss how upon receiving a pension, children could leave it invested to potentially benefit from further growth (though this is not guaranteed) and even pass it on to their children.

The next generation need to know your wishes, where your documents are stored and who to contact regarding your finances. You could even involve them in conversations with your financial adviser to establish that relationship early and ease the transition once you’re gone.

You may find that many of your financial goals are aligned, such as those for work, travel and leisure.

Talking to your parents about money

Just as it is for your kids, you need to know about your parents’ will or pension expression of wish and whether you are a beneficiary. Currently, a pension isn’t usually part of an estate and therefore a beneficiary wouldn’t normally pay Inheritance Tax. It’s worth keeping in mind that you could still pay Income Tax dependent on the deceased’s age at death, but generally, a pension is currently a way to pass unused wealth between generations. Make sure it is a conversation that you engage in.

It’s important to note that the Inheritance Tax rules on pensions are changing. From April 2027, unused pension funds and lump-sum death benefits payable from registered pension schemes will potentially be liable to Inheritance Tax.

As with the normal pension rules, any Income Tax due will be levied on the residual amount once any Inheritance Tax has been paid by the scheme.

As well as speaking to your parents, it could also be worth talking to a financial adviser to understand how to best handle large sums of money that may be passed on to you. For example, if you are a pension beneficiary, staying invested could mean you build further wealth, though this isn’t guaranteed as investments can fluctuate in value.

Preparing now and understanding things in advance could mean you are better prepared to know what will happen in the event of a death. This could help the process during the difficult period of sorting finances soon after a bereavement. It is better to talk about these things now, rather than be left with uncertainty when things are at their most stressful.

How to talk about money with a financial adviser

It’s crucial to have these conversations with your loved ones so everyone understands the situation and what to expect. And seeking expert, professional guidance from a qualified financial adviser can make everything clearer. They’ll have the experience and knowledge to help you potentially maximise your wealth, but first, you need to think about how you’re going to go into your initial meeting with them:

• Be clear: You must share all the relevant information with your adviser. This will include any assets, debts, spending habits as well as your short and long-term financial goals.
• Ask questions: Get as much information as you can. It’s your money, so take the chance to weigh up all your options before deciding the best course of action.
• Create a plan: Together, you’ll come up with a bespoke plan that suits you, your financial situation and your loved ones. And all the while, you’ll find that talking about finances feels more and more comfortable.

Speak to a financial adviser to unlock your True Potential

Talking about finances doesn’t have to be awkward or stressful. Our advisers are experienced in these conversations, so get in touch to find out more about how we can help you.

With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. This material is not a personal recommendation or financial advice and the investments referred to may not be suitable for all investors.

Tax is subject to an individual’s personal circumstances and tax rules can change at any time.

ISA eligibility and tax rules apply.

Pensions eligibility and tax rules apply.

True Potential Wealth Management is authorised and regulated by the Financial Conduct Authority. FRN 529810. Registered in England and Wales as a Limited Liability Partnership No. OC356611.

True Potential Investments LLP is authorised and regulated by the Financial Conduct Authority. FRN 527444. Registered in England and Wales as a Limited Liability Partnership No. OC356027.

True Potential LLP is registered in England and Wales as a Limited Liability Partnership No. OC380771.