By Professor Sally Dibb, Dr Kevin Broughton, Dr Hussan Aslam and Dr Yurun Yang, The Centre for Business in Society

The Centre for Business in Society (CBiS) at Coventry University recently was commissioned by the Money & Pensions Service (MaPS) to review the evidence on Talking About Money and examine the relationship with financial wellbeing. The review shows that conversations about money help people to make better financial decisions, improve their financial resilience, and ensure they get help sooner. Recommendations are made about how the UK public can be supported by the financial services sector, help and advice organisations, and through policy, to have financial conversations.

People in the UK find it hard to talk about money and about their financial worries. Not doing so, can potentially worsen their financial circumstances; negatively impact relationships, family, work and housing; reduce their ability to work effectively; and impact their physical and mental health. The review draws on a literature review of published research reports, the grey literature and academic sources, as well as four extensive data sets collected through CBiS’s own studies. This evidence suggeststhat those who talk about money experience better financial wellbeing.

Why we should talk about money

A range of evidence uncovered by CBiS identifies positive outcomes from having ‘good’ money conversations. These include increased confidence and feelings of empowerment, reduced anxiety and stress, and improvements in financial circumstances.  People who regularly seek financial support and ‘talk about money’ are shown in CBiS’s research to be more financially resilient – more able to pay to pay their debts, save, and manage their money – than those who only do so in a crisis.

However, many in the UK population are reluctant to talk about money, which is a major concern given the hardship seen during the cost-of-living crisis, and the negative effects that not talking about money or leaving it too late can have.

Barriers to good money conversations

63% of respondents in our survey had not sought any financial advice in the last two years, with only 13% of respondents doing so regularly. The British ‘taboo’ of talking about money remains extensive and endemic. There are barriers both to having informal conversations about money, such as with family and friends, and to having formal conversations about money, such as with financial services firms, financial advisors or help and advice organisations.

Informal barriers include:

• UK social norms about not talking about money. 
• People worrying about ‘letting others down’, particularly loved ones.
• Embarrassment, shame and/or stigma around financial difficulties.
• Self-isolating effects of feeling pressure to be ‘independent’ regarding money management.
• The effect of low confidence or low self-efficacy, including educational qualification levels.
• Delaying talking about financial issues, even though this worsens financial difficulties.

Formal barriers based on organisational and/or institutional factors are more likely to affect formal conversations, where people seek support from professionals, organisations or institutions. Some barriers are greater for those who are financially or otherwise vulnerable, or who have certain protected characteristics, such as those from ethnic minority communities. They include:

• Lack of trust in certain financial institutions, state agencies or other bodies, reducing willingness to discuss financial issues.
• Worries about the possible negative repercussions of revealing financial problems.
• Lack of access to the ‘right’ channels, people, organisations and/or services or to suitable support.
• Delays in seeking support from organisations, resulting in a worsening of financial difficulties and negative impacts on future financial options.

What good conversations about money ‘look like’

A good financial conversation is timely; it involves an organisation or individual I trust, respects my privacy; takes place in a manner, location and through a channel of my choosing; and helps improve my financial wellbeing.

Who the parties involved in conversations matter, because overcoming barriers to talking about money involves ‘trust’. Having good informal conversations with the ‘right person’ from family or informal social circles, in confidence, can help people ‘open up’ about money. For good formal conversations to take place, speaking to the ‘right person’ who is empathetic is important to building trust, as are confidentiality and the legitimacy of expertise. Socio-demographic characteristics can influence the ability to have, seek, or be part of good money conversations. Employment status, ability to work and ‘life stage’ also influence preferences informal or formalconversations.

When the conversation happens is shown to affect people’s preparedness to talk and the potential for the conversation to impact on their financial situation. Where people are in their ‘life course’ (not just their age, but also their circumstances) affects their needs around good money conversations. The timeliness of conversations and whether they occur in ‘moments that matter’ significantly impact their effectiveness and whether they have a lasting positive impact. Normalising money conversations from a young age is important, if the stigma linked to talking about money is to be overcome.

Where the conversation takes place is important because creating the right environment or setting is essential to building the trust required and helping overcome reluctance to talk. The setting for talking about money and providing support can affect levels of trust, with people often being more confident to talk in places they know or where they feel safe. Formalinitiatives or services provided through informal or familiar settings are helpful in normalising talking about money; e.g. those creating the right ‘social dynamics’ for people to discuss money in the context of other life issues and/or enjoyable activities. As the ethnicity of the support seeker can have a bearing on levels of trust in support organisations, minority ethnic communities benefit from support that is embedded within their communities and which is underpinned by an understanding of their community cultures and languages.

How the conversation happens matters, as support needs to be tailored to meet the heterogeneous needs of different individuals and groups. The provision of culturally/community-appropriate settings and relatable support is imperative to building trust between formal organisations/individuals and minority or vulnerable groups. The most financially vulnerable groups have specific needs and often feel judged when having formal conversations around credit and debt, leading to reluctance to engage. Peer-based approaches can be an effective way to support financial conversations, develop financial literacy and to help people understand they are not alone in their financial difficulties. There is potential for employer-based approaches to enable financial conversations in work settings, although not everyone desires such a setting.

Not Talking Enough About Money – Implications

Informal and formal conversations about money both have a valuable role in supporting good financial wellbeing, yet many of the public still do not regularly talk either informally or formally about money, or only do so when facing a financial crisis. Those who more regularly seek financial advice, financial guidance or talk about money with others also have better financial wellbeing in terms of managing their money effectively, saving, and repaying their debts. However, the barriers to financial conversations are complex. Stigma or feeling embarrassed or ashamed often prevents people from talking about money, even informally with their family and close friends. Many are uncertain about which organisations they can trust for formal conversations about their money and find it difficult to differentiate between independent help/advice organisations and those selling products and services.

There are many implications and learnings for the financial services sector, for housing providers, for physical and mental health organisations, for schools and those working with young people, for financial literacy programmes, for help and support bodies, and for policy formulation. 

These are detailed in our report Good Financial Conversations produced in association with the Money and Pensions Service.

Through understanding the impact of organisations’ activities, behaviours and policies, the Centre for Business in Society at Coventry University seeks to promote responsibility, to change behaviours, and to achieve better outcomes for economies, societies and the individual.

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