4 Common Money Questions Financial Experts Get Asked All the Time
Deep in my Google search history are two very basic questions: “What is investing?” and “What is bitcoin?” I have no shame admitting this because it can be just plain uncomfortable talking about money, despite the fact that it impacts so many aspects of our daily lives. Luckily, there are plenty of resources available to help bridge that gap. Aside from web searches, podcasts, and articles, savvy financial experts have also made it their job to help people not only learn about money, but really understand it.
Yep, that’s right: I said “learn.” Amanda Holden, a writer and the founder of Invested Development, said that being able to navigate money systems is a skill that requires practice. “Babies aren’t born with an inherent understanding of compound returns,” she told Apartment Therapy. “So, money must be discussed to be learned, like any other topic.”
Regardless of where you’re starting in your relationship with money, you can always learn what it means to manage your money in a way that will suit you and your lifestyle. As intimidating as it can seem now, understanding finances is an asset in your toolbox that will go a long way. Holden talked to Apartment Therapy about the questions she gets the most often and why.
“What do I do if a friend wants to spend more money than I feel comfortable with?”
Relationships are tricky, regardless of their nature. And money can unfortunately be a common stressor, especially if there is a conflict regarding how people view, treat, and feel about money. “I’ve found that people have a very difficult time getting along with friends and family whose spending values don’t align,” said Holden. “Weddings are a huge sore spot. For example, I’ve heard of brides and grooms expecting their friends to go into debt for a bachelor/bachelorette party or for a peach taffeta dress that they’ll only wear once or to travel for multiple events celebrating the same marriage.”
There is perhaps no “trick” to getting around those uncomfortable relationships, but Holden recommends basic consideration for others. “In the U.S., sadly, you have to assume that the people around you are struggling financially,” she said. “The stats are clear: the majority of people are stressed about money.”
The fact is, money influences every decision you make. Acknowledging your own relationship with spending is necessary to set boundaries about what you personally do or don’t do with money. “The first best thing is to have open and non-judgmental conversations with your loved ones about their financial limits—and honor them!” she said. “That won’t always be possible, so the next best thing is to respect, without question, any financial boundaries they set.”
“What am I doing wrong?”
It’s understandable that so many people consider money—specifically, their lack of it—to be a moral failing. But as Holden puts it, the biggest money “mistake” is being born at the wrong time, in the wrong place, as the wrong gender or race, or to the wrong socioeconomic group.
“The reality is, our financial outcomes have as much to do with where we begin as anything else,” she said. “We live in a country that makes being poor expensive and provides the best benefits to those who already have wealth. Trajectories towards and through both poverty and wealthiness seem to have compounding effects.”
Financial literacy in itself is a privilege that’s been historically only afforded to the elite, and in the U.S., that means white people who are already well-off, and have the means to pass their knowledge down to future generations. Understanding money is half the battle to managing it—the other half is committing to the work of learning what you don’t know.
According to Holden, the first step is often reframing your outlook about learning about money, and internalizing the fact that you are smart enough to understand it. “There is a mistake in the belief that the most important tenets of managing money are too difficult for someone to understand,” she said. “Anyone can learn to budget and invest; the significantly tougher piece is the mental and emotional commitment.”
“What is the point of saving? Why can’t I just spend my money now?”
Holden said there is one pattern that she sees with every generation, from Gen Z to boomers: fatigue. People are, understandably, exhausted by world events, particularly in 2020, and the idea of taking time out your life to budget may seem trivial and exhausting in the face of so much uncertainty.
“Young millennials and Gen Z tend to ask this question more often: What’s the point of ‘saving for later’ if the world is ending due to climate change, anyway? I call this the ‘apocalypse is my retirement plan’ money management excuse,” she said. “On the one hand, it’s not an unfounded question. On the other, it’s just the newest form of avoidance—every generation has had their version of this. I have to remind people that if the world is going to get worse and life is going to get harder, you’re likely going to want more money, more resources, more options—not less.”
If 2020 has shown anything, it’s that major disasters can happen at a blink of an eye. While there’s nothing you can do about the virus itself, or our institution’s response to it, being proactive about your money is within your realm of control to be as prepared for emergencies as possible, big or small.
“How do you start investing?”
Even the concept of what exactly investing is, is confusing for a lot of people. As an investing expert and educator, Holden regularly fields questions which accounts to open, and the different investing methods. If terms like “Roth IRA” or the difference between “funds” and “stocks” are daunting to you, you’re not alone—and Holden gets it.
“The bad news: it will require some work to wrap your head around these topics,” she said. “You may have to learn a few different times in a few different ways. It’s almost like a new language! The good news: this stuff is completely within your capacity to learn.”
Any new concept is intimidating at first, particularly if you’re unaccustomed to thinking about money beyond just earning and spending. But the more you learn, the more you’ll be able to understand how to relate it to your own life. “Some of our easiest methods—such as set it and forget it, passive investing using index funds—have also proven to be some of the most successful. Once you learn how to do it, up front, you can more or less coast. And that’s where I try to get all of my students: to a place where they can coast.”