Today's article is a guest submission from Janine Guenther CFA, CMT, a Portfolio Manager and Senior Wealth Family Advisor with over 30 years of industry experience. The views presented here do not necessarily represent those of Bellwether Investment Management.
In this installment of the Third Chapter Wealth blog, I tackle the supposed taboo of talking about money. Many of us grew up in an era where money was not spoken about regularly—or openly, for that matter—and girls were socially conditioned to leave the financial decisions in the hands of men.
Though times have changed, today's goal is to demonstrate that more needs to be done. Addressing the taboo surrounding money-talks is crucial for promoting financial literacy and well-being. The reality is relatively straightforward—being in control of your life is largely associated with having a handle on your finances.
This might be a surprising pivot, but we can use the analogy of SexEd programs taught in schools. Our kids learn the anatomically correct names for body parts as early as preschool. Why? The theory is that the more you know, the less likely it is that you'll be victimized by others by being able to recognize predatory behaviour. Furthermore, a deep understanding of your body's natural functions should enable you to flag potential health issues. Overall, the education system helps prevent unnecessary harm through knowledge.
Unfortunately, the same cannot be said about our relationship with money. While some provinces offer a financial literacy unit in high school, it's neither universal nor comprehensive. If we started talking about SexEd in high school, most of us would agree that it's a bit too late.
One of the easiest things families can do to bolster financial literacy is to just talk about money and its various components, such as income, expenses, savings, debt, and the like. Simply knowing if you're a saver or a spender can spur a conversation about managing allowances, how family vacations are funded, and, well, a million other topics. Sometimes a microcosm can help contextualize these concepts for younger family members. Vacations are big, costly, and take significant planning—a child is unlikely to grasp these more substantial ideas, but paring it back can be useful: if they want to buy a new toy or game, work through how long they'd need to save weekly allowances in order to afford it. For example, if your family is planning a theme park vacation, go online with your kids and browse potential souvenirs, the costs, and the benefits of making that purchase. That way, the acquisition at the theme park is less of an impulse purchase and more of a plan. This is an excellent method to initiate a conversation about the cost of items and if the amount spent matches the anticipated value.
Family discussions offer a chance to discuss financial boundaries, enabling everyone to understand how their spending decisions align with their income. This demonstrates the impact of financial control on your lives—wealth is not solely about accumulating as much as possible (though it is certainly desirable), but rather, it serves as a tool to enhance agency by opening up new frontiers of possibility.
Moving to generational differences, this is the area where I am most optimistic. TikTok has, fortunately or not, brought financial literacy to the masses. There's a significant disparity in terms of content quality, which warrants a trip to the grocer for a grain of salt, but I digress—a few spots of sunlight is better than none at all. Empirically speaking, there's no clear consensus that one generation is more financially savvy than the next, but an Ipsos Poll done in 2023 indicated that Millennials and Gen-Z were more interested in getting professional financial advice compared to the more “do-it-yourself” approach popular amongst Gen-X and Boomers. There's a chance that younger generations have been advised to start earlier or to not make the same mistakes as their predecessors, or perhaps the increasingly elusive dream of home ownership has instilled a sense of urgency to get ahead—regardless, while the reasons aren't completely clear, the heightened interest bodes well for their future.
When it comes to relationship building, being able to communicate about money can be a leading factor in whether that relationship endures. A few academic papers have taken interest in this topic, and it appears that avoiding financial discussions can lead to misunderstandings and conflict. Open communications are crucial to maintaining healthy partnerships. Like most families, my partner and I split the family duties, and finance falls to me. We plan together for the future and have goals for our money in the short and long term—it is just that carrying them out is my responsibility.
Cultural norms can play a leading role in steering (or outright detouring around) money-talks. Some cultures discuss it readily; others are more avoidant. Fighting these norms, especially when you are in one that does not appreciate these topics, can keep your financial wellness on track. This is where a professional money manager can provide a safe space for you to share your ideas, ask questions, and formulate plans. The key is to find a way for you to be in charge of your wealth, and a neutral third-party with a level of expertise in these matters can be a significant boon today, tomorrow, and beyond.
My dream is to be in a coffee shop and overhear a table of women discussing their investment portfolios. Women can usually talk about everything; if we can add money to the mix, our society would be better off as a whole.
Next month, I will delve into common errors made by investors. The best part? The majority are easily avoidable with a little preparation, a dash of curiosity, and a willingness to learn.
