Why it’s Important to Talk About Your Debt
A lot of people don’t want to talk about their debt and their financial situation. They might feel uncomfortable discussing financial details, they could worry that they will be judged or looked down upon for having debt, or they may prefer not to talk or think about their debt because it causes them stress.
Whatever the reason, many people keep their financial issues to themselves. However, this typically isn’t a good path to follow. While having conversations about debt can seem daunting, talking to your loved ones about debt can have many benefits. Your friends or family may be able to help you, they may be able to offer emotional support, and they might have ideas for what you should do next. When you talk about debt, you’ll be in a better position to tackle your issues together.
Here are some strategies for talking about debt with those you care about.
Talking to your Spouse or Partner About Debt
It’s not uncommon for partners to hide debt issues from one another. In fact, recent surveys show that approximately 1-in-5 Canadians who are married or in common law relationships say that their partner does not know how much debt they have. This can be a serious issue as one partner’s debt can have a significant affect on a family’s finances.
This is why, if you are in a serious relationship, you should let your partner know about your debt as soon as possible. A good way to approach the situation is to work on a plan to repay your debt yourself first, before you mention it to your partner. This way, you’ll be able to say, “I have x-amount of debt, but I’m currently paying off y-dollars each month, with a goal of having it paid down by a certain date.” This will leave your partner feeling more comfortable with the situation since you have a plan.
You can then work together to come up with a way to make debt repayment easier and faster. It may be painful or scary to bring up debt initially, but once both of you have laid your debts out on the table and discussed how you will handle them, you’ll be in a better situation going forward.
Talking to your Children about Finances and Debt
It’s a good idea to introduce your children to the concept of budgeting and debt, whether or not you have your own debt. How you explain these concepts to them, and how much information you give them, will depend on their ages.
It’s a good idea to start the process by discussing budgets. You may want to do this by giving them a weekly allowance and telling them that they should make a plan for their money. They’ll soon learn that they will need to save up to buy something they really want. This is an important lesson to learn.
A good way to introduce the concept of debt is whenever your kids see you make a purchase with a credit card. If you put your groceries on your credit card, for example, make sure they know that what you’re actually doing is borrowing the money to pay for the groceries and that you will need to pay it back later. Let them know that if you don’t pay the money back when you should, it will cost you more.
If you have your own debts, start by explaining to them how you ended up in debt and what you are doing to solve the problem. Once your children understand the concept of debt and budgeting, it will be easier to explain to them why the family needs to reduce spending for a while so you can get your debt under control. Older children can even help manage the family budget.
Talking to your Parents about Debt and Finances
Talking to your parents about debt can be difficult. If you have your own debt, they may want to help you pay it down once they know about it, which could put them into their own financial trouble. If you see that they are the ones struggling with money, you might find that your parents are not willing to discuss their money issues with you. They might be too proud to discuss their debt or they may feel like their children shouldn’t be prying into their finances or giving them advice.
If your parents don’t want to talk about their own finances, you may wish to start the conversation by talking about your own money situation. Let them know how you created your budget, how you handle your debt, how you track your purchases, etc. Once you’ve shared this information, they might be more willing to discuss their own finances.