This is a guest article by Outlaw, who lives and works in New York’s financial district and writes on the blog Credit Card Outlaw.
I don’t believe in conspiracies.
A few weeks ago someone I vaguely knew from college forwarded me an email about how the World Trade Center was likely destroyed by government “beam weapons.” I don’t even know what a beam weapon is, but it sounds absurd. Then, more recently, I was watching a special about Roswell on the History Channel.
Interesting stuff… But I just don’t buy any of these conspiracy theories, and here’s why: people love to talk. We can’t resist talking, in fact.
No employee or government official can be trusted for long before he or she gives in to the urge: a high-traffic whistleblower blog, an interview on CNN, a tell-all book. No matter how far up the food chain you go, people love telling others about their “hot” information. This is why insider trading is a problem. This is also why viral videos go viral.
It is this same human compulsion to share exclusive info that sometimes convinces me I have to spread the personal finance gospel. Now that I am totally immersed in personal finance — I blog about it, I read about it, I try to live it — I want others to get in on the action, too. I want others to see their money working for them, rather than only working for money.
When a friend tells me he is liquidating everything to load up on gold bullion, or that he plans to take his fiancee on some extravagant vacation financed entirely by high-interest credit cards (when he still has massive student loans to pay down), I start to get hives. And chest pain.
Fact of the matter is, I hate watching someone walk into the path of an oncoming bus. Especially if that person is a long-time friend or family member.
Despite this, being the armchair financial advisor no one asked for can lose you friendships. It can upset family. And it can even backfire… If you’ve ever given someone a well-researched stock tip, you know what I mean. If the stock goes down, your buddy blames you for his loss. As if you literally stole the money from his wallet and ran off with it. And if it goes up, you get no credit — he will praise himself for his amazing “find” and sound judgment.
I’ve developed a rule of thumb that seems to work really well for spreading the good word. Here it is:
1. Help close family members (parents and siblings only; grandparents are a lost cause) when you see them doing the wrong thing consistently, or when you know they could be allocating their money better, or saving much more. They’re your own blood, after all, and you have an obligation to help them get on the path.
2. Let friends and co-workers spend their money however they want. You can’t convince someone to lead a financially sound life if he or she has already committed to a delusional “rock star” existence fueled by credit cards. If your friend’s spending habits are truly unbearable, you need new friends. Just as it is hard to stop drinking if all of your friends are stone cold alcoholics, it is hard to remain financially savvy if those around you abuse wealth and do not understand the time value power of money.
When you do stage an “intervention” with a family member, keep it low key. I have personally found that “show, don’t tell” is an excellent strategy here: rather than lecturing to them about interest rates or emerging market ETFs, loan them one of your favorite books on personal finance or investing. “I’d love to get your views on this one when you finish reading through it,” is what I say. It’s low-pressure and laid back. (The Richest Man in Babylon is good for those who seem to have no respect at all for money. For more hopeful cases, try an inspiring Warren Buffett biography.)
If they are ready to see the light, they will. And if not, hey, at least you tried. Now get back to making money.
Photo credit: Solo, with others