Money has historically been viewed as a taboo topic.
People don’t tend to talk about their personal finances in day-to-day conversation. Some even refuse to talk about money with their nearest and dearest.
But opening up about money can improve people’s mental health, whether they’re sharing their own financial worries or talking to others about theirs.
Financial wellbeing is one of the fundamental components of mental health. Financial stresses, such as worries around debt or future spending, can cause or exacerbate mental-health issues such as anxiety and depression.
86% of those surveyed said their financial situation has made their mental health worse
In fact, a recent study by the Money and Mental Health Policy Institute found nearly half (46%) of people in problem debt also have a mental health problem and 86% of those surveyed said their financial situation has made their mental health worse.
The fear factor
There is a range of psychological factors that stop people from talking about money. There’s the fear of judgement, the discomfort of being vulnerable and certain long-standing cultural norms.
Historically, in Western cultures, we have seen money as a sign of status and something we can associate, not always accurately, with happiness.
So, when it comes to concerns about money, it can make people feel unhappy if they feel they are achieving less than others – particularly when it comes to tangible, material things.
Speaking to people not emotionally tied to our financial situation can provide a cool, objective point of view
Looking at a neighbour and comparing our financial situation to theirs is an inescapably human trait, but also a potentially damaging one.
The complexity of finance can also make us fearful and uncertain. People don’t like to admit when they don’t understand something, and this can prevent us from seeking the answers needed to improve knowledge. There’s also a fear that, because they don’t know everything, they are vulnerable to being exposed and taken advantage of.
A societal shift
Thankfully, there’s a growing trend towards openness around money and financial matters, driven by a societal shift as people have better access to high-quality financial information and a greater ability to communicate.
Trust is the key ingredient to a successful conversation around money, established through empathy over time
People can better learn and improve their financial literacy and their knowledge around money management. There’s also more recognition about the importance of addressing financial issues as a part of overall wellbeing.
There is a flip side to better access to technology, however. For example, social-media platforms cause people to put themselves in a vulnerable position by oversharing personal information or being exposed to unregulated financial promotions or outright scams.
There are two critical aspects to opening up about financial situations. First, there’s the access to expertise, then there’s the emotional element. Speaking to people not emotionally tied to our financial situation can provide a cool, objective point of view.
Some even refuse to talk about money with their nearest and dearest
Advisers can help build plans to tackle almost any financial situation. But every relationship will involve different people in different situations, so taking this into consideration and providing a tailored experience is important.
It’s about being empathetic and creating a non-judgemental atmosphere, talking in a measured and positive way that doesn’t blame anyone for past decisions.
A good technique is to tell someone a story about where you are trying to get to, creating a narrative around the path you are going to take to achieve their goals. It’s also beneficial to create simple steps and set clear objectives. Avoid jargon and use simple language.
Ultimately, trust is the key ingredient to a successful conversation around money, established through empathy over time.
Joe Wiggins is behavioural finance specialist and director of investment research at St James’s Place
With several years of unearned advice charges to repay (with interest) to their clients (many of whom may go elsewhere once they’ve banked their cheque), I imagine quite a few SJP partners are likely to be sweating about their financial situation and need some counselling about their mental health.
Most of whom are still locked in with Exit Charges!!
To impose exit charges on clients who wish to encash or transfer away all their SJP investments because they’ve been ripped off would be adding insult to injury. I don’t think the FCA would tolerate it.