Money talks - tips on how to navigate those awkward chats about finances

Talking about money is often difficult. There is plenty of information about how to talk to your financial planner, review money management with your spouse or romantic partner, and teach your children to manage money.

However, there are several awkward money conversations that don’t fall into any of these categories, and failing to have these talks can impact friendships, home-sharing arrangements or family relationships.

Being clear about your expectations and what you are bringing to the table can help ensure the relationship stays on track. Money expert and author Emily Guy Birken says in most cases disagreements arise when there is a spending mismatch. This could be because of disparate salaries, different attitudes to money or simply being at different stages of your financial life journey.

“Unfortunately, keeping mum about your money concerns to avoid an uncomfortable conversation also leads to resentment and strife,” Birken says.

 

Housemates or flatmates: In a society where sharing costs makes sense, you may have opted for a housemate or flatmate. Have a frank talk about who is paying which bills so that you avoid any payments falling through the cracks.

Decide if you are going to share groceries and, if not, designate cupboard and fridge space accordingly.

 

Travelling with friends: They say you don’t know someone until you’ve travelled with them. I often recall the horror story of a friend who went on a trip to Spain with a friend. Three days into the trip, friend B was robbed of all her money.

Friend A then had to carry the expenses for the rest of the trip. Friend B insisted she needed the most expensive cosmetics, then shopped up a storm buying clothing and souvenirs. Worse, it took her months to repay friend A when they got home and the friendship soured on the back of awkward conversations about reimbursement.

Discuss budget expectations before you travel. You could opt to save together and then budget as a group. A money diary to keep track of expenses on the trip is also a great idea, and apps such as Splitwise and Goodbudget make this a really simple task.

Splitwise allows you to create a group with your friend(s). The app helps you to keep track of who paid for what and who still owes money. At the end of the trip, each person will be able to see at a glance what they owe or are owed.

Goodbudget allows you to create money envelopes with budgets for different expenses. Each time you make a purchase, for example from the “eating out” envelope, the amount in the envelope is reduced so you can track your expenses in each category.

 

Family and money: The Old Mutual Savings & Investment Monitor 2023 showed that 43% of respondents borrowed money from family and friends to make ends meet.

Before you lend or borrow money, make sure there is a clear agreement about the amount and when the money will be paid back. Get it in writing and get both parties to sign the document, along with two witnesses. Also bear in mind that a loan agreement between two individuals is not covered by the National Credit Act. Birken points out that there is nothing stopping you from drawing up a repayment plan in writing after the loan has been made.

Alex Holder, author of Open Up: Why Talking About Money Will Change Your Life, says you could initiate the conversation by giving the person a repayment option. Often, the borrower may be loath to address the issue because they are not able to repay the money in one lump sum amount.

You could gently suggest a regular smaller repayment, such as R100 a month. It may take much longer to get your money back, but the borrower may come back with a bigger monthly figure and your friendship will remain intact. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.

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