5 reasons why you should talk about money with friends

Hundred dollar bill

Religion, politics and money -- these are the things you're not supposed to talk about in polite company.

Few people obey the rules about religion and politics anymore, except perhaps with their future in-laws, but Americans are surprisingly tight-lipped about money.

We don’t discuss it in personal ways, and that's a mistake.

You probably don’t need to tell casual acquaintances how much you make or reveal your net worth to someone who might decide that, from now on, drinks are always your treat.

Instead, find a few trusted intimates and talk to them about money.

Here are five reasons why you'll gain important advantages by discussing your finances:

Reason 1. You can set a metric by which to measure yourself.

We talk about our goals in numerical terms. How often have you heard someone vow to lose 20 pounds or brag that she finished a marathon in less than five hours?

By not talking about your finances, you lose the chance to state your income or saving goals in numerical terms, use those numbers as motivation and get high-fives when you achieve the thing you wanted.

I have a couple of friends who know how much I intend to make this year. By publicly stating that number, I give myself motivation and a way to know when I've reached my goal -- and I have people who will celebrate with me.

Reason 2. You'll plan mutually affordable gatherings.

Remember the last time you went out with that friend who wanted to split the tab at Chez Expensive, and you wondered how you'd make your rent?

If you were honest with each other about your financial circumstances, you could agree to meet at Chez Reasonable.

Or maybe you'd discover that you're both broke and decide to stay in and watch movies at Chez You. Either way, your wallet wins.

Reason 3. You'll develop new budgeting skills.

Just how does your best friend from middle school manage to travel for two months of every year? If the two of you talk about finances, you can ask.

You're out of luck if the answer is "my trust fund." But if clever budgeting lets your friend ring in the New Year in Basel or spend the summer in Norway, you can take a page from her money management plan and maybe do some traveling of your own.

Reason 4. You'll decrease your chances of getting ripped off.

About how much is reasonable to spend on a coat, a car, an apartment in your neighborhood or a taxi ride downtown? Do you know approximate values for your used stereo, your idea at work or your novel?

This information spreads by word of mouth. Knowing approximate numbers can help you spend appropriate sums on purchases and demand realistic amounts on the things you sell.

Reason 5. You'll discover more employment opportunities.

Many business opportunities also spread by word of mouth. Tell your friends what you're looking for, and they'll be more likely to send those opportunities your way.

For example, if I know you're charging $30 an hour, then I'll guess that you don't want the $10-an-hour gigs but might be thrilled to have a $40-an-hour job tossed in your direction.

Same with salaried jobs: I'll let you know about an opportunity to make $20,000 a year more.

To do that, though, I need a rough sense of how much you make now. Otherwise, I might not pass along an opportunity for fear of offending you by guessing too low (and wasting everyone's time).

You don't have to reveal everything or ask for advice on everything, and you're well within your rights to answer "enough for what I need, thanks" the next time a virtual stranger (or nosy relative) asks how much money you have.

Learn to talk about money with a select few, however, and see just how much the American habit of saying nothing whatsoever about money wasn't helping you.

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