People would rather talk about anything other than money, including marriage problems, mental illness, drug addiction, race, sex, politics and religion. In a survey of 1,202 American adults conducted by Capital Group, home of American Funds, and one of the world’s leading investment management firms, survey participants ranked financial topics such as household earnings, retirement savings, debt and inheritances as the most taboo topics of discussion.
“Most Americans agree that talking about their finances is a social taboo. It’s time to break that habit and inspire new, productive conversations about money, saving and investing,” said Heather Lord, senior vice president and head of strategy and innovation at Capital Group. “Small changes in how people talk about their finances can yield significant returns over time. Confronting the money taboo head-on is one way to create a more financially secure future for one’s self.”
Americans rank financial topics as the most taboo
When asked about topics that are too taboo to discuss with friends, respondents overwhelmingly indicated it was those connected to money: household earnings (39%), retirement savings (38%), debt (32%) and inheritance (25%). Politics (17%), drug use (14%) and racial issues (8%) were considered significantly less taboo. Many respondents said finances were none of other people’s business, while others cited awkwardness and concern about creating ill feelings among friends.
Male and female respondents provided almost identical responses when asked about personal matters that might be considered taboo, such as marital problems, religion, politics, sexual orientation and family disagreements. However, when it came to financial topics like household earnings, retirement savings and debt, more women consider them a social taboo than men.
About one third of those surveyed — including 30 percent of men and 40 percent of women — indicated they had discussed financial topics with friends and peers in the last six months. The survey found that those who are most willing to talk about money are either very confident (perhaps too confident) about their finances or very insecure.
People turn to financial advisors and spouses to discuss money
The survey found that when faced with a major financial decision or event, people discuss it with their spouse or a financial advisor. Women (50%) are more likely turn to their spouse than men (36%), and women (50%) are also more likely to speak with a financial advisor than men (41%). By generation, millennials are nearly twice as likely as baby boomers to turn to friends or extended family to talk about managing money. The survey also found that millennials are more likely than Generation Xers or baby boomers to turn to their parents, co-workers or online resources for financial advice.
The findings reveal four ways to confront the money taboo and to change saving and investing behavior:
1. Start at home. Talk to your spouse or significant other about money, and encourage conversations between parents and children. Millennials are almost twice as likely as baby boomers to say they would speak to their children about money at an early age; many adults say they are still teaching their adult children about financial topics.
2. Seek advice. Most investors can benefit from financial advice. Financial advisors can help investors make smart decisions about investing for the long term and help protect against market downturns. Nearly half of survey respondents said they would feel comfortable turning to an advisor for a major financial decision.
3. Ask your employer. Many Americans get their first experience with retirement saving through an employer’s 401(k) plan, but the Capital Group survey found that employers are an under-utilized resource. There is an opportunity for employers and benefits managers to increase employee engagement and productivity when it comes to financial planning and other money issues.
4. Picture your retirement. Capital Group research earlier this year showed survey respondents who first envisioned the lives they want to lead in retirement recommended saving 31% more per paycheck in a 401(k) plan than those who did not. This simple insight could be used to promote conversation and innovations to help Americans build a bigger nest egg for their later years.