Financial conversations can be difficult and uncomfortable, leading many Americans to neglect them altogether.
Whether it’s debt, retirement, investing or estate planning, more than 80% of people intentionally avoid discussing financial topics with family and friends, according to a report from the Consumer Financial Protection Bureau.
While skipping these conversations may seem harmless, the silence isn’t neutral. Delaying these discussions often means delaying important financial decisions, too. As time passes, those missed opportunities can compound, sometimes creating more financial stress than if they had been addressed from the beginning.
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We all procrastinate from time to time, especially when confronting something that takes us out of our comfort zone. But avoiding it doesn’t make it go away.
The same is true when it comes to your finances. Telling yourself you’ll make a plan to pay off debt next month or wait until you’re making “enough” money to start investing may bring you peace in the moment, but those decisions carry consequences that continue to grow the longer you wait to deal with them.
Interest continues to accumulate on debt, investment opportunities get missed, and conversations can feel more uncomfortable the longer you put them off. That’s because financial decisions tend to build on one another.
Delaying one conversation or decision leads to another, making it harder and harder to catch up down the line. What may have started as a small challenge can snowball into a much larger issue over time.
So why are people so afraid to confront these issues head on?
For many of us, financial avoidance isn’t a result of lacking motivation, but rather, lacking confidence. If you don’t understand the basics of credit, debt management and investing, it’s easy to make mistakes in the very beginning.
This can lead to feelings of embarrassment or the fear of making another wrong decision, causing many people to walk away from the subject entirely.
However, avoiding the problem doesn’t make it go away. Oftentimes, it makes the problem more prevalent in your life.
The less involved you are in your finances, the less confident you’ll feel when making future decisions, creating a cycle that can be hard to break.
Aside from feelings of embarrassment, the CFPB also found 51% of Americans believe financial matters should stay private. And for many, this means managing financial affairs alone.
In my experience, many clients mistakenly equate financial independence with self-reliance. They assume asking for guidance or discussing their situation with someone they trust means they’re less capable of managing their money when that’s not the case.
Financial independence and financial isolation are two separate things.
Being financially independent doesn’t mean you have to figure out everything on your own. It’s about taking ownership of your financial future. Seeking advice from trusted family members or financial professionals doesn’t mean you have to lose your independence. It can actually build accountability, give you a new perspective or provide you with more information to make a more informed decision.
To begin building that support system, ask yourself:
Who are the trusted people in my life?
Think about family members, friends or mentors who’ve demonstrated responsible financial habits and can share their perspective on important financial decisions.
Am I working with a financial professional who can provide guidance when things get complex?
Whether it’s retirement planning, learning how to invest or developing a plan to pay off debt, working with a qualified professional who can act in your best interest, can give you the tools needed to make the most informed decision with confidence.
Do I communicate the current financial situation with my loved ones on a regular basis?
Scheduling periodic check-ins with your spouse or other trusted family members can help you stay accountable, discuss future goals or identify areas for improvement.
Am I willing to continue learning and ask for help when needed?
Financial literacy isn’t learned overnight. Like anything else, it’s a skill that takes time and effort to develop. Building and maintaining financial independence is achieved with the help of a trusted team.
Having a trusted support system gives you the opportunity to ask questions, gain confidence and ultimately address concerns before they get worse. Often, those conversations are what help people transition from financial avoidance to financial independence.
Making the choice to avoid your finances can compound just as powerfully as choosing to take action. The only difference is that one builds opportunity, while the other creates obstacles.
Your financial future is shaped by your decisions. Starting the conversation, asking questions and building a reliable support system are choices that will help move you closer to true financial independence.
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
