Inspired by The Weight Of Money’s Start Conversations About Money and the conclusion of Ask Uncle Bill’s Don’t Read This By Suze, I started just leaving comments on their posts and instead decided to expand my thoughts into a full post.
The Weight Of Money has it right when they say that we need to start more “non-threatening, non-comparative” conversations with those around us. A critical component of that kind of discussion is not preaching or assuming an air of superiority, even if you do happen to be an expert. (I don’t happen to be an expert, so this is easy for me!) Nobody likes being made to feel stupid, and that will be counterproductive to being able to learn from those you talk to.
For a couple of years now, even before I started ThoughtfulConsideration.com, I have been asking my family, friends and coworkers about their finances. Usually the lead in is something like, “Dollar amounts are none of my business, but what percentage of your gross salary are you saving for retirement?”
There are so many questions to ask that it’s hard to think of them all, but here are some I could come up with off the top of my head:
- In terms of percentages, where is your retirement? Real estate/Roth IRAs/Traditional IRAs/etc.?
- How do you make big financial decisions? Little decisions?
- Who handles the finances in your house?
- How do you pay for cars? Cash/loan/lease/etc.?
- Is financial independence one of your goals, and if so, what does it mean to you?
- What goal(s) do you need to reach before you can retire? How did you establish those?
- If you have a 401k program at work, does your employer offer a match? If so, are you contributing enough to receive their maximum match?
- What do you do with your tax refunds or work bonuses?
- What would you do differently if you were given the chance?
- What insights have you gained about any aspect of personal finances, money management, or investing?
- Where did you learn to manage finances? Whose example do you follow?
- What good decisions have you seen other people make? What bad decisions?
It’s fun to hear what other people think about money and investing. Opinions and approaches run the full gamut of possibilities, and the experiences of other people are very valuable in thinking through our own decisions. Instead of trying to think of what I’ll say next, I try to ask questions and let the other person do most (or all) of the talking.
There are quite a few interesting things I’ve learned from these conversations:
- Our family’s Adult Allowance program — which my wife and I really enjoy — was modeled after our friends’ example
- Some people have a spouse who loves to spend and that will probably prevent them from ever accumulating any significant amount of wealth
- Some people are counting on one asset (investment property, a small business they run, etc.) as a very large component of their retirement, for better or worse
- In some cases, people are in tremendous financial holes because of their own poor choices
- Some people value paying off debt (even mortgages) over maximizing net returns
- Many people have quite a bit of money sitting in accounts that don’t pay much because they don’t know about the higher interest earning alternatives (this was us before we started paying attention!)
- Some people have decided that they prefer to pre-pay their bills rather than keep the money in a savings account
- Regardless of how much I kick myself for not focusing on saving and budgeting sooner, we’re doing quite well now (managing our finances, that is, not necessarily in terms of net worth) compared to a lot of the people I talk to
- Everyone has different priorities — This shouldn’t come as too much of a surprise, but the extent to which priorities vary continually amazes me!
- Most people don’t know as much as they probably should about personal finances
- Most people don’t spend nearly enough time thinking about their personal finances
Here’s the Question Of The Day:
What insights have you gained as a result of talking to other people?