Financial Psychology Center

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Anna Bahney

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Thanks to Covid-19, some folks are broke and some are flush. Here’s how to talk about it

(CNN) – As the pandemic rages on, millions of Americans are suffering financially while millions of others are doing just fine — some even better than ever. But how do you talk about money with friends or your own family, without feeling ashamed or offending anyone?

America was already economically divided and a “don’t-talk-about-it” money culture, said Alex Melkumian, a licensed marriage and family therapist and founder of the Financial Psychology Center in Los Angeles. Now, with people finding newly exposed sensitivities and dividing lines, gaps are widening and conversations have become even more difficult.

We’re already in a period of financial trauma for people, said Melkumian. Conversations, which leave people feeling judged or insulted, don’t help. Here’s how to talk about money while being sensitive to those around you.

Listen more, spout advice less

Jake Morris was starting a financial advisory business and his wife Whitney was a verbatim hearing recorder for the Social Security Administration in New York’s Hudson Valley when the pandemic struck. Very quickly, Whitney’s work dried up as hearings were put on hold then went to a telephone format and the launch of Jake’s business was delayed.

Then he got a text from someone in his inner circle: “Do you both still have jobs?”

Morris said it was so insensitive that he had to laugh.

“To me, that was so stark. It was almost funny,” Morris said. “But so harsh.”

With their job situations turned upside down in a matter of days, they still weren’t over the shock. They have each found work in their own ways, but it is not at the level it was before.

“Anyone who has had a job loss or gone into retirement knows there is a loss of identity,” he said. “We need a little sensitivity training, I think. It isn’t helpful to say, ‘How does it feel to have your whole life torn out from under you?'”

Jake Morris found listening to be the most helpful way to hear about other people’s financial situations.

Based on his experience, he now asks people he meets, “How has this impacted you?”

“I let them talk about it the way they want to,” he said.

If you’re the person who has remained employed and is financially unscathed, do more listening, Melkumian advised.

“The most important thing we can do is listen and resist the urge to jump in and fix it, because much of this can’t be easily changed.”

Suggesting that someone ‘pivot and do something else,’ for example, can be good advice, Melkumian said. But your friend or loved one needs to be ready to hear it.

“You may have connections to offer them, but it is your connection with them that is most important,” he said.

Pick up the phone

These serious conversations are best had in person. If social distancing is preventing that, a phone call works best.

Nothing on the topic of personal livelihood and well-being is better conveyed by a text, said Ashlee deSteiger, a certified financial planner with Gunder Wealth Management in Michigan.

“With friends and family, I don’t want a text,” she said. “There is just too much tone to be lost in a text.”

She suggests setting boundaries like not texting in frustration or sharing things in which tone can be misinterpreted.

“Those conversations need to happen over the phone or face-to-face,” she said.

If you’re the one receiving the insensitive texts or messages, avoid getting defensive and try to consider where the other person is coming from.

“I suggest reframing the situation to, ‘I know my friend or family member is doing the best that they can for themselves and their family.'”

That, she said, may help you see beyond the posts and conversations that you think lack empathy.

Be direct

If you are having financial difficulties, now is the time to speak up about it, Melkumian says, because you’re not alone.

“If you are really struggling and feel you can’t say to your friend, ‘I don’t know where my next rent payment is coming from’ — then when can you say that?”

When Ed Hart was able to reopen his hair salon in Hermosa Beach, California, he noticed many of his clients experienced the shutdown much differently than he had.

While Hart was struggling after a major loss of income, his customers were working from home, earning the same income, some even more than before.

“People that I know who retired well are fine,” he said. “Younger people I know that work for large companies are working out of their homes, they are okay. But the people who are consistently struggling and having trouble are business owners, entrepreneurs.”

So he decided to address this awkward disparity directly.

“I made a sign and put it by my station,” he said. “It says that there is no secret that we are going through a financial hardship. I understand that they may be going through a hardship, too, so we won’t raise prices. However, if you are financially strong, pay more if you can.”

And they have. After one client received a $200 treatment, he said, she included a tip and left.

“It was a $1,000 tip,” he said. “I called her right away to thank her. I didn’t know what to say. It was overwhelming. ‘Don’t worry,’ she told me.”

Don’t be tone deaf

Some people who have celebrated things like buying a house, taking a trip or getting a new job, have been met with anger by hurt friends and family who say it smacks of being tone-deaf to the moment. Just look at the public reaction to Kim Kardashian’s post about her 40th birthday celebrations on a private island earlier this month.

The response was largely not enthusiastic.

“Congrats on this nomination for most tone deaf tweet of the year,” Twitter user @beyondbrighton replied to Kardashian. “You want normal? Try people unemployed, at food banks, teaching kids at home, or worse in the hospital by the tens of THOUSANDS! Oh the plight of the wealthy & their struggle to an escape to a private island.”

The context matters when sharing good news, said Melkumian.

“If you post your celebration in a way that says, ‘I’ve been struggling and in order to overcome something and I did this, this and this,’ documenting and chronicling your fight, it isn’t out of context,” he said.

But in this moment, there are other things to keep in mind, he said.

“There are political factors, sounding tone deaf, other people being broke,” he said. “How do you tell your truth without coming off as insensitive?”

It may be that there isn’t a way to do that, he said, and it is better right now to keep it to yourself and just to listen.

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These apps are changing the way we talk about money

Tech leaders on changing how we talk about money 03:15

(CNN) – People still don’t like to talk about money, especially their own.

“We aren’t over the money taboo yet,” said Majd Maksad, co-founder of Status Money, a personal finance site that allows users to anonymously compare their finances with that of their peers. “We’re not at the point where people are going to sit with colleagues and friends to talk about how much they make, how much they owe and their credit score.”

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But increasingly payment apps like Venmo and sites like Status Money are getting people to share that kind of information. And it may not be a bad thing.

Knowing what your peers actually spend and save — and not just drawing your own conclusions based on the fabulous vacations they post pictures of on social media — changes how you spend and save.

“Virtually everyone reacts to seeing what their peers are spending,” said Francesco D’Acunto, assistant professor at Boston College’s Carroll School of Management, “and everyone tries to move to their peers’ level.”

D’Acunto co-authored a study that examined the impact of exposing people to the spending information of their peers. While people who saw that they spent less than their peers started spending slightly more, the people who saw that they overspent cut their spending by three times as much as those who increased their spending, according to the study.

“It is the opposite of Keeping up with the Joneses” D’Acunto said. “This type of intervention has a sobering effect. It happens for people at all income levels and those with high levels of education, people who should know better.”

Helping to break the silence

Any conversation about money is better than not talking about it all, said Dr. Alex Melkumian, a financial therapist in Los Angeles, even if it is just a making a silly joke about “buying back my dignity” or posting a wine glass emoji on Venmo to show that you just repaid your friend for drinks the other night.

“Money is a bigger taboo than sex,” he said. “We have an emotional attachment to money and there is guilt and shame about not being able to talk about it.”

At his practice, which assists people in making behavioral changes regarding the way they relate to and use money, he asks clients to bring in something deeply personal, that perhaps no one else has ever seen: bank statements.

“It is amazing how much you can know about a person and how intimate that feels when you’re reviewing their bank statement with them,” he said. Patterns emerge and there is some relief that they are no longer suffering in silence, he said.

“We can talk about anxiety or poor behavior choices,” he said, “but unless we look at the numbers and see where the money is going, we can’t explore the emotional attachment to it.”

A platform like Venmo, which allows people to directly pay one another often with an emoji-filled description that can be seen publicly, also helps make personal spending patterns more open, Dr. Melkumian said.

“What’s interesting to me is that they could have set it to private,” he said, noting the app has a setting that keeps transactions from being publicly disclosed. “Instead, they chose to put it out there.”

But even if they want to share, they aren’t being totally transparent.

“It is all coded with funny emojis or inside jokes between people,” he said. “Ultimately what they are communicating is that they still aren’t comfortable talking about money.”

How do you compare?

While the conspicuous consumption of those around us can be fairly evident — the neighbor’s fancy new car, for example — we often don’t know the full picture of our peers’ finances, like how much they earn, what they spend on groceries or their debt load.

But Status Money gives you some visibility into those unknowns. The app shows users’ finances, including their debt, savings and spending on things like housing and entertainment, side by side with those of average Americans, as well as those of people who share their age, income level, location, home ownership status and credit score.

In some cases, the comparisons help users know whether they are even in the ballpark of appropriate spending and saving levels and can even influence them to change harmful behaviors or patterns.

“There is a pent up curiosity about ‘How am I doing compared with other people?’,” said Maksad. “There is a little fear. A little competition. A little encouragement to do better.”

A social network on the site places users in a feed with people in their peer group and allows them to anonymously discuss and crowdsource their money questions, troubles and solutions.

“Being able to share this with other individuals and a community, without having to publicly divulge your identity, allows people to get the benefit of talking about money without enduring the personal psychological cost,” said Maksad.

But to get the most out of Status Money, users will need to provide a good deal of personal information — date of birth, annual income, whether they rent or own a home, an address and the last four digits of their Social Security number if they wish to link to a credit bureau report that provides score-related information. The app also asks users to link their bank accounts, credit card accounts and taxable and non-taxable accounts.

The anonymity that Status Money offers makes the social network for finance more feasible, said Maksad. “The social feed works because it is about preserving this privacy. People don’t talk about money on Facebook or post about it on Instagram. This is purpose built for talking about your own finances.”