As a personal finance blogger, I know more about money than the average person. I suppose this is a good thing since I never (hopefully) have to worry about money. But, am I supposed to get involved when the people around me start complaining about money?
My logical conclusion is no. It’s not my job to save my friends from money mistakes, but it’s really not that simple. I started this blog because I don’t want people to make the same money mistakes I made. If I turn my back on those around me, doesn’t that make me a hypocrite?
Generally speaking, I tend to avoid giving any advice unless I’m asked. Even then, I simply can’t help everyone due to time constraints. I imagine many of you have similar problems so here’s how to figure out who to help.
Do you really like this friend?
I know this is going to sound terrible, but you really need to decide who is worth helping. You can’t help everyone, so you need to figure out who you want to help. I’m much more likely to help a childhood friend or a co-worker that I’ve known for years as opposed to someone I say hi to at the gym. Relationships matter, so you should help the people that are important to you.
The tricky thing is how you go about your advice. Whenever I offer any advice, I remind people that I’m not a financial advisor and that any advice I give should be researched on their own. I never give any tips on investments. Instead, I advise people how I would handle things if I were in their situation and what resources I recommend reading.
Now, I know I said I tend to help only those close to me, but there are times when I will speak up. I had a coworker who was being recruited by a pyramid scheme while another had an advisor who told her not to enrol in the employee pension plan. In both cases I just let them know what they were (or were not) getting into.
Let them know you can help
The hard part about helping friends is letting them know how you can help. Many of my peers know that I write about personal finance, but they may not be willing to ask for help. It’s not that they may not be interested in the help, but asking friends for help with their finances is not exactly a common thing to do.
Generally speaking, I usually know if someone is struggling with their money as they usually talk about it passing. The good thing is, that it’s usually nothing serious. Most of the time they’re just talking about not saving enough or wishing they knew more about money. These are very simple fixes that don’t require much input from me.
I always offer to help people with their budgets and I’m more than happy to explain things that they may not be familiar with e.g. management expense ratios. Not everyone is comfortable just asking for help so by letting people know that I’m willing to listen, it makes things less awkward for them.
Don’t get offended if they don’t listen
Despite my best efforts, not everyone will listen to me. But do I get offended? Not at all. It’s not my money after all. I’m used to people not listening to me so it really doesn’t bother me.
Now if you’re a casual person trying to help your friends, it may drive you nuts when they don’t listen to you. Of course, it makes no sense for them to buy a $700K home on a salary of $50K, but that’s not your call. You can give your input, but if they don’t want to listen, that’s their problem.
I also realized it was important for me to understand that not everyone views money the same way as I do. Although I’m against the idea of carrying any balance on my credit card, I get why some people are okay with carrying a small balance.
Teach, don’t preach
The most important thing about saving your friends from a money mistake is to teach them why they’re making that mistake. It’s easy to just tell them that they’re wrong or that they’re doing something wrong, but how does that help them?
I prefer to educate people since I find most of the time people will want to learn more. In many situations, they simply don’t know that there are other solutions or options available to them. Preaching rarely works when you’re trying to help people with their finances which is why I never attempt to do it.
You’re under no obligation to save your friends from their money mistake. If you do decide to get involved, be smart about who you and help, and be careful about the advice you give. If they listen, great! If they don’t, that’s their problem. You’ve done the best you can.