Why do people find it hard to talk about money?

Perhaps this is because, when it comes to our finances, many of us just don’t want to talk. We might avoid the conversation completely, change the subject, or put it off until another time.

A report by Lloyds Banking Group earlier this year described the “M-word” as “Britain’s greatest taboo”. Some of the main findings of the survey, carried out by pollsters YouGov, were stark:

- 50 per cent of UK adults believe that talking about personal money matters is taboo – higher than sex (42 per cent), religion (26 per cent) or politics (14 per cent).

- 43 per cent have felt embarrassed talking about personal finances.

- 25 per cent have lied to their family and friends about their personal finances.

- 65 per cent have discussed winning the lottery, but only 34 per cent have ever discussed their will.

- 27 per cent have lied to parents about their personal finances; they are most likely to have lied about how much they spent on a single item (14 per cent), how much debt they have (13 per cent) or what their monthly spend is (11 per cent).

This article appears in Talking Money - a special report and content series from The Scotsman in association with Womble Bond Dickinson

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These numbers translate into real-life experiences and anxieties. Not talking about money causes stress, relationship crisis and unnecessary difficulty for many. Research by The Money and Pensions Service – a collective of three public sector advisory bodies that includes the Money Advice Service – found that 63 per cent of people said money worries were affecting the mental health of someone close to them.

The M-word campaign aims to remove the stigma from talking about money and help people discuss it at key life stages such as getting married, leaving home, or managing Christmas finances. Lloyds has partnered with Relate, the relationships charity, to find ways to make family conversations about money easier. Catherine Kehoe, managing director customer brand at Lloyds Bank says: “Whether you’re getting married or talking to your parents about their retirement plans, it’s good to talk about money. Being open about our finances can help avoid problems in the future. By focusing our efforts on the ‘M-word’, we hope that this campaign will help start the conversation in families and make people more comfortable talking about money matters.”

Jonny Williams, partner and head of financial services at law firm Womble Bond Dickinson, says: “Sometimes there’s a lack of communication about finances in families caused by one person taking the lead with the other stepping back. This lack of transparency between all involved can cause lots of problems including stress for the person bearing the weight of financial troubles at the same time as the other partner having no idea.

“The taboo is further exacerbated when people turn a blind eye to their finances by not even opening their bills and bank statements.”

His colleague Natasha Brownlee, managing associate in WBD’s financial services team, agrees: “This type of arrangement can come to the fore on a default of a loan for example as both parties are liable to repay the debt. A default letter can come as a shock when you’ve not been involved in the day-to-day management of your finances”.

The Lloyds survey also shows that 37 per cent of people in a relationship have argued with their partner about money, 30 per cent have argued with a friend about money (with lending money the main cause of arguments)and 23 per cent have lied to their partner about money. Most commonly, people are lying to conceal the amount of debt they have.

The debt issue is enormous, according to a separate Money Advice Service study from November 2018. It suggests UK adults are hiding more than £96 billion of debt from friends and family, with the average hidden debt per person in the UK amounting to £4,164 (see story below).

The Financial Conduct Authority’s Financial Lives survey of 2017 also painted a worrying picture of our relationship with money, with 24 per cent of adults saying they have “little or no confidence” in managing their finances and 46 per cent of all UK adults reporting “low knowledge about financial matters”. The survey showed 18 to 24-year-olds were the least confident and knowledgeable of all UK adults when it came to managing money and financial matters.

On a positive note, the Lloyds survey found that 61 per cent of people felt better when they did open up and talk about their money concerns.

Commenting on the Lloyds research, Professor Tanya Byron, consultant clinical psychologist and a patron of Relate, says: “While we’ve become more comfortable talking about subjects like mental health in recent years, money is still a taboo subject for many of us, and people are shying away from important conversations as a result.

Feelings about money can be strong, but conversations about money – even difficult ones – don’t have to lead to arguments. Talking openly about money can help us take shared responsibility, strengthen our relationships, and protect our mental wellbeing.”

Of a separate survey from April this year, which also showed money to be a taboo subject, psychologist Tamara Licht Musso says: “Not talking can seem the best short-term strategy, but is a negative coping mechanism, and at some point it cracks. Avoidance is also a classic way of coping to keep anxiety at bay, but we cannot avoid our thoughts, which is where all emotions emerge, therefore pushing back such thoughts may result in them appearing through symptoms such as difficulties with sleep.”

Yvonne MacDermid, chief executive of Money Advice Scotland, believes that the inability to talk about financial matters is compounded when an individual gets into debt.

“Money is a very emotive subject and there is still a real stigma around debt which prevents some people talking about their situation,” she says. “There is a sense of failure and embarrassment. We want to remove the stigma around debt – not normalise it, just get more people to talk about it.

“We are better than we were at talking about debt, but there are also more people getting into debt. We have seen the emergence of the working poor – sometimes people doing two or three jobs to get by – and we are also seeing professional people coming to us for advice, which hasn’t happened before.”

MacDermid attributes this partly to the ease of spending: “It’s very easy to use contactless payments and for them to mount up unless you are one of those few people who keeps track of every penny.”

She sees a clear link between unmanageable debt and relationship breakdowns and poor mental health. And Graeme Jones, chief executive of Scottish Financial Enterprise, also insists that there is a direct relationship between understanding personal finance and positive mental health.

He says: “Having the confidence to manage money proficiently is empowering and will undoubtedly help support the financial wellbeing of the individual. It also has the potential to benefit wider society and the economy if this were to contribute towards a trend where personal debt decreases and savings or investment capital increases.”

Challenger banks such as Monzo have been credited with taking a much more proactive and nuanced approach. Natalie Ledward, vulnerable customer specialist with the bank, says: “In the past, it’s not been the done thing to say ‘I’m experiencing a mental health episode’ and I need help [when dealing with a bank]. People do not think about doing that but as a society, we are getting better at it and banking is moving with that.” She notes some “really positive progress across the industry”, but agrees there is still lots of work for banks to do – especially in terms of cultural change and staff training.

So it would appear that we have a while to go before the majority of us are ready to say: “Let’s Talk About Money (Baby).”

This article first appeared in The Scotsman’s Talking Money 2019.