In a world in which people discuss money we will all have a basis for comparison. Financial Transparency will allow people, specifically women and people of color, to know they are being under paid. Keeping up with the Joneses will feel less urgent if you realize that the Joneses also have debt or earn twice as much as you do.
Social conventions say that discussing money is impolite. We fear that we will sound like we are bragging or make others feel bad about themselves. Or, we fear we will look inadequate and evoke pity. We don’t want to make others feel uncomfortable.
There are much worse things than people feeling uncomfortable.
If we don’t know what others are earning and if we don’t know what others are paying for things how can we achieve equity in our society? We have all heard that women are paid less than men for the same jobs. But if women don’t know what others earn how will they know they are underpaid? How do we negotiate for a raise if we do not have the necessary numbers to support our request?
This also applies to spending. How does one know they are overpaying for rent if they don’t know the going rate? A lack of transparency causes people to overspend if they don’t have the time to research the cost of comparable items. The result is that those with the resources to investigate costs (time, connections, literacy, and research skills) pay lower prices than those less able to do so.
Comparison is a huge driver of spending in American society. We see what someone else has and contrast it to our own situation. But we are always comparing just small parts of the greater picture. We are comparing the end result of consumption without knowing what the other person earns or what their other expenses are. We know neither their bank balance nor their debt owed.
I believe that money transparency is vital to promoting equity.
In her program We Are The Culture Makers my business coach, Kelly Diels, says that we need to ask the question “Who is getting off the hook?” Who gets off the hook if we, as a society, do not talk about money? Not discussing money benefits those who are hoarding money and those who grow richer from our consumer economy. Lack of transparency benefits those who can get away with paying women less than men and paying women of color less than white women.
Discussing money makes it easier to negotiate salaries and prioritize our purchases. It makes social, gender, and racial inequality that much more obvious. For additional reading on this topic, I enjoyed the New York Times article We’re All Afraid to Talk About Money. Here’s How to Break the Taboo.
Frequently secrecy and shame go hand-in-hand. Talking about anything can help reduce the stigma and negative feelings surrounding the topic. So many people today have feelings of guilt, shame, and inadequacy around money. If we begin to discuss the topic then we may be able to start healing some of these wounds. People will gain a clearer understanding that their money or lack of money is not a reflection upon their character or value as a person.
I feel so strongly about this topic that I am building a business around talking about money. In addition to discussing money with friends, family, and co-workers, discussing finances with a professional can be very beneficial. Discussing money is an emotionally charged issue and working with an impartial third party can help you to move through the feelings to look at the numbers more objectively.
Whether you are discussing salaries with co-workers, living expenses with friends, modeling money behaviors to children, or creating a financial plan with a professional it is important to talk about money. Openness around money can chase away the stigma, shame, and discomfort.
Maura Madden is a registered investment adviser in the State of Washington. The Adviser may not transact business in states where it is not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.