Shall we talk about money?
In one of the Dr. Seuss books (“Oh Say Can You Say“) loaded with tongue-twisters, he exclaims, “And now let’s talk about money…”
But apparently, the answer for many is to “not talk about money.”
eMoney Advisors ran a survey in Summer 2019, and the results were eye-opening. You can follow the link to the survey results, but I’ll share some of the highlights right here.
57% admit to purposely avoiding the topic with friends
43% experience negative feelings when talking about money
37% rely on parents or family members the most for advice
63% never consulted a financial professional
Of those who work with an advisor:
30% admit to hiding information about spending habits
25% with an income of $150,000 are hiding information
Three points I’d like to focus on.
First, about frequently checking your accounts.
Included in the survey was a question about how frequently accounts were checked. It turns out 25-34-year-olds are the best at checking in on their finances. A whopping 52% of them check in on their finances every single day. By comparison, just 27% of those above 54 years old checking in on their finances every day.
What’s the right balance?
If people look at a set of numbers long enough, some will eventually break down and want to tinker with them. I’ve seen three decades of “financial car wrecks.” Step one in creating a financial car wreck is tinkering with investments on a frequent basis. Be careful – that often ends badly.
Second point: hiding information.
Thirty percent of survey respondents who work with an advisor hide information about their spending habits. My initial response: “only thirty percent?”
Frankly, we are completely OK if clients do not want us to know they go out to dinner six nights a week, or spend $286 per month on wine, or whatever they choose to spend money on. Really, it’s OK. It is literally their money and since they are adults, they can do as they please.
We tell folks repeatedly “we do not CARE what you spend each month. That is not relevant. What we want to know is the NUMBER.” Because this kind of information tells us how much income (or principal) will be needed each year to maintain your style of living, or reach goals you have in mind. And sadly, some folks do not know their number, and often go through a denial phase when we show them.
Some clients DO want this level of help. Others, not so much.
And that’s OK.
Years ago, when my business was strictly “transactions,” spending habits, net worth, and future goals were less of a priority than tomorrow’s employment report. As a planning centric firm (meaning, we lead with planning), getting as much of the information (and hopefully the full picture) is critical to make good decisions.
Third point: talking about money.
What is the hangup with us, as a nation? We’re not measuring ourselves against anyone else. So why do we feel reluctant to share this kind of information with folks who could help? From the survey results: nearly half (43%) report feeling stressed, embarrassed or confused when talking about their personal finances, and 20% never talk about money with other people.
Further, eMoney Advisor CEO Ed O’Brien also reported 63% of respondents have never consulted a financial advisor. It’s safe to say that most of the people who have not consulted an advisor could benefit from some sort of financial advice.
As a nation of individuals, we are lousy at commitment. I believe it is clear that many folks need to commit to understanding their own finances, and more folks need to speak to someone who could help.
You can start by getting help right here: www.mullooly.net