The Upside to the Down Economy: Talking About Money
Suzanna De Baca -- Expert Business Source, 8/26/2008 7:04:00 AM
Dunleavey interviewed me for this column, and I corroborated her theory based on my own experiences. I have certainly witnessed or overheard more candid conversations about money, not only among clients, but among my friends and neighbors. Certainly, everyone is complaining about common pains-in-the-wallet, like high gas or food prices, but it seems to extend beyond that.
Wealthy acquaintances and friends are admitting to credit debt, to over-extending themselves on housing or other fixed expenses, or keeping up the lifestyles their kids have come to expect. Maintaining a luxury lifestyle can be difficult if your bonus (or your job) has been significantly downsized. Executives are as worried about their jobs as hourly workers, and in many cases, those high earning individuals don’t have as much in savings as one might imagine.
Interestingly, as Dunleavey notes, they’re starting to talk about it. I’m getting more phone calls than ever from people wanting advice not on how to invest, but how to think about a budget, how to reduce debt, and how to start creating a real financial plan. Winging it just isn’t working as well these days. And talking about it helps, for a variety of reasons.
Among the wealthy and middle class, admitting to financial stress is often accompanied by feelings of shame, embarrassment or fear. Surely we’ll be judged by others as careless or irresponsible, many think. Or worse, many feel that if they lose their status or lifestyle as defined by net worth, they may lose their friends, position, or the respect of others.
But if we suspect that everyone is going through the same thing, it is easier to divulge that we’ve overdone it, lived too high on the hog, or invested in Fannie Mae or Freddie Mac. Misery loves company, but once you find out that your bad habits or financial mistakes aren’t that unusual, you may feel relief.
When I lived in New York City, I was stunned by how openly people talked about money. As a native Midwesterner, I was accustomed to an environment where no one talked about money, unless it was to discuss the price of corn. It was unimaginable that one would ask another person how much they paid for their house; but in New York, total strangers would ask me at parties how much my rent was. People compared mortgages, maintenance fees, and other purchases like we talked about the weather in the Midwest. I got used to it and I found it very healthy and liberating.
As a financial professional, I am convinced the more we talk about money openly the more we diffuse the complicated emotions that surrounds it. Fear, shame, embarrassment, envy, greed, or anger about money and what it represents tend to dissolve when we can share our stories and when we learn that others also struggle. If there is a positive aspect to this particular down cycle of the economy, perhaps it is, as Dunleavey says, increased openness about money. Perhaps people will evaluate their priorities, their spending, their friendships, and what money really means to them.
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Suzanna de Baca is president of Private Capital Solutions Group. Securities offered through Broker Dealer Financial Services Corp. Member FINRA & SIPC. Investment Advisor Representative of Investment Advisors Corp., A Registered Investment Advisor. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice.
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