How to have those difficult conversations about money

Five scenarios to ponder

By Donna Peters

The word ‘money’ is often treated as a four-letter word.  From a young age, many of us were taught to not speak of money.  The unintended consequence of that upbringing is that many people don’t learn how to have necessary but difficult conversations about money, whether at home or in the workplace.  

1. How do you ask for a raise or say no to a request?

Timing is everything. First, choose a time and place that you know will set the right atmosphere and catch your boss or employee with an open mindset. If you are asking for a raise, arm yourself with the statistics to know your value. There are resources you can Google, like Glassdoor, or contact a headhunter to get an idea of comparable salaries in your field. If you are on the other side of the conversation and have to decline a request, do the reverse – know the employee’s value to your company and their comparable value in the market. The research alone may change the dynamics from an emotional debate to an informed discussion. 

2. How much should you share about your finances with your family?

Honesty is the best policy, but, frankly, your finances are your (and your significant other’s) business. If you are seeking advice from them, that is a different matter, and some transparency would be needed to get meaningful answers. If your brother or sister-in-law is only being curious (aka nosy), avoid that conversation altogether because, unfortunately, envy or jealousy are common emotions if there is income disparity. And never reveal to your children your salary unless you want the whole school to know. While it is essential to have money discussions with your children so they know the value of a dollar, they also will benefit from learning to respect people’s privacy. 

3. How do you discuss retiring with your financial planner?

Retirement is a personal decision and very different for everyone. It can be a difficult conversation if you don’t have your finances in order for your meeting with your advisor. They will want to know things like: Are you part of a government or private pension plan? Is it defined benefit or defined contribution? Is it indexed to inflation? What are your expenses and goals for retirement? Do you have any other sources of income? Do you need life or term insurance? Have you prepaid any funeral expenses? In other words, that question about retirement cannot be answered without many questions being answered first. 

4. How do you approach that awkward conversation about money owed by a friend?

It happened more frequently ‘in the old days’ — when you were out with a friend and you lent them money to cover a check. Now with debit, credit cards and no one using cash, this does not happen as often. Should a friend owe you money for some reason, don’t let it sit and fester between you. There is a chance that they forgot or are very stressed about it. Mention once that they can e-transfer you back the money. If they agree, you will both be happy to clear the air. If they don’t respond or agree, you can work with them to find a reasonable solution. Of course it also depends on the amount owed, how often this friend borrows from you and whether their friendship is worth keeping. 

5. How much should you donate to charity?

Giving to charity is also a very personal decision and different for everyone, but it is essential. There is no right amount, but I have heard the average American gives 3 to 5 percent of their income. Some recommend starting with 1 percent and then gradually increasing the amount, while others say a target of 10 percent of taxed income is the goal. The obvious answer is another question — how much can you afford? Then you have to decide on local versus global charities and then causes that are important to you or your family. PRO TIP: Monthly giving options will seem more affordable and effortless.

Donna Peters studied Finance and Economics at Western University and later obtained her CFA. She joined the fixed-income Portfolio Management team at a prominent Canadian life insurance company following her graduation from university and has remained there since. She currently lives in Toronto with a loving husband, two teenage sons and an adorable poodle.