Talking about money can be difficult ⁠— Broke Millennial Author Erin Lowry on how to break the stigma - CNBC

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As a college student for the past four years, I never had open conversations with my peers about money. We would eat in the same dining halls together, go to the same free plays on-campus and use our student cards at the on-campus coffee bar.

But money and our socioeconomic backgrounds were never openly talked about, and it was obvious who were the 'haves' and 'have-nots' when people mentioned their second homes or the boarding schools they attended (though we were on the campus of an elite liberal arts college, so we were all quite privileged).

Since I graduated in May, the socioeconomic differences between me and my friends became obvious as some of them embarked on lucrative careers in finance while others, including myself, chose traditionally lower paying fields like journalism and non-profits. While some friends talk freely about how much they're making in their first post-grad job, what they're spending on rent and how much they've started saving for retirement, others avoid any mention of it.

Talking about money in the real world, I learned, is still as taboo as it was in college. In fact, a 2018 study done by Capital Group found that people were more comfortable talking about race, sex, politics, and mental illness with their friends than they were talking about their salary, debt and retirement savings. 

So how do we break the stigma around money? How do we engage in more honest conversations about serious realities, like paying off medical bills or creating a student loan debt repayment plan? 

I spoke to Erin Lowry, author of 'Broke Millennial Talks Money: Scripts, Stories, and Advice to Navigate Awkward Financial Conversations' about how people can maintain their friendships and relationships while still being honest and frank about their financial situations.

Getting honest about money in your relationships

One of the biggest reasons people feel uncomfortable talking about money is because it requires vulnerability, says Lowry. For many people, discussing what they can and can't afford can make them feel embarrassed or even ashamed. Though Lowry notes that most people end up self-selecting into friendships and relationships with people of similar socioeconomic backgrounds, maintaining friendships with people in different financial situations is possible.

While it's difficult to not care (or to care less) about what people think, it's essential to being able to communicate honestly about money.

"You have to be okay with setting your boundary and releasing what someone may or may not think about you," says Lowry. "Most of the time, we're fairly self-interested creatures, we're not always thinking about how our decisions are impacting other people."

If your friend invites you to a birthday dinner that's outside your budget, you should be honest with them about why you're not able to attend, she explains. Most of the time your friends won't know if an event is affordable for you, and if they're a good friend, they won't be condescending or rude about why you can't attend.

Lowry suggests giving a reason about why you're missing out on a night clubbing or a birthday dinner, if you're comfortable. For example, tell your friend you're trying to pay off your credit card debt or working in a profession that's low paying.

If you still want to hangout with your friends after they suggest doing an activity that's outside of your budget, you might opt for what she calls a 'compliment sandwich'. Instead of getting bottomless brunch, acknowledge that you want to spend time with your friend but suggest a cheaper alternative, like grabbing bagels and going to the park.

Some people may end going in the opposite direction by prioritizing staying in and saving money over going out and seeing friends.

"I aggressively prioritized my bank accounts over investing in relationships when I was in my early 20s to the point where there are friendships that really fell by the wayside because I said no to every little social event," says Lowry. "So it is also very important to find balance within how you are handling your financial life but also considering that investing in relationships matters as well."

If you find yourself frequently having to skip out on social obligations because you can't afford them, you can also try and create a separate fund for social activities. Budgeting apps like Digit or Douugh can help you automatically save money towards your specific goals. Both apps will use information about your income and expenses to determine how much money to allocate money towards your savings goals.

Digit

On Digit's secure site

• Annual Percentage Yield (APY)

  Begin earning 0.10% APY after using the app for three consecutive months

• Minimum balance

• Monthly fee

  30-day free trial; $5/month

• Maximum transactions

• Excessive transactions fee

• Overdraft fees

• Offer checking account?

• Offer ATM card?

Terms apply.

When it comes to navigating money conversations in romantic relationships, Lowry stresses that honesty about your finances is essential, especially when making major life decisions like moving in together. If you and your partner are making different amounts of money, you'll have to figure out what feels fair in the context of your relationship, she explains.

For example, you might choose not to split rent evenly, or one person might pay for groceries and utilities so the other partner can work towards paying off their student loans.

Regardless of how you choose to split expenses in your relationship, it's important that you're able to communicate honestly about your financial situation with your partner.

Bottom line

Learning how to talk openly about money and your finances can be stressful, embarrassing and shameful. If you want a better relationship with your friends, your romantic partner and your finances, you can start by acknowledging what you can and can't afford.

While it may be difficult to tell people why you're not going to someone's bachelor party or why you can't afford a pricier apartment, a good friend or partner will be understanding when you're honest with them about your finances.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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