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Don’t Tell Others How To Spend Their Money

This article was written by in Financial Advice and Advisers. 11 comments.

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.

free adviceIt 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

Published or updated January 17, 2010.

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About the author

Outlaw lives and works in New York's financial district. He is interested in sitting on the beach, making money, and sleeping in. Every major decision he has made in the past year has been influenced at least in part by one of those desires. If Outlaw could tell his unborn son only one thing, it would be this: instant gratification is overrated. He blogs at Credit Card Outlaw. View all articles by .

{ 11 comments… read them below or add one }

avatar 1 Luke Landes

Outlaw: Thanks for this article. This is something I’ve wanted to write about for a while. I prefer to stay completely out of my family’s and friends’ financial lives. If someone in my family is doing something truly harmful to themselves I might ask whether they’re sure they want to proceed, but I would do that as a family member, not as someone who writes about personal finance. Even if a friend asks me outright for my thoughts, I try not to get involved. And I never judge.

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avatar 2 Anonymous

Three comments to this post:
1. It’s not only money but things related to their health (ie smoking, weight, drinking, etc.)
2. NEVER borrow money or friends and family borrow money from you
3. What about if it’s your parents and in the long run you’ll have to take care of them financially when they get old?

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avatar 3 Anonymous

Outlaw, I agree about not getting into other people’s business. It’s the spirit of one post called “Everything is Rational – The Answer to All Things Irrational”. How do we know that what we think is the right way, really is the right way? We don’t.

Let our friends and others do what they want, b/c to them, it makes them happy. That’s all that matters.

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avatar 4 Anonymous

It feels like I’m getting punched in the gut when people tell me about this kind of decision. Like you, I’ve decided that giving people financial advice (at least unsolicited) is not the way to go. If they ask me, I’m likely to refer them to one of a couple books, depending on their situation.

Fortunately, word-of-mouth spread in my family about my blog, so most of my family members are reading it, at least now and then, and a few have told me how useful they found it. Plus a couple friends read about Dave Ramsey’s baby steps method and decided to use it to get out from credit card debt. But that’s passive influence, which is all I feel able to do. Trying to control people and interfere in their own business rarely works out well. Still, it feels like a punch in the gut.

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avatar 5 Anonymous

“You can lead a horse to water but you can’t make them drink”

Many years ago a mentor took the time to provide me some sound advice. I didn’t listen… then. Eventually the words came back to me and were inspirational.

Isn’t one of the great joys about blogging and mentoring the knowledge that you have helped someone help them-self?

Unless you are intimately involved in someone’s finances you have no business giving specific advice such as what stock to buy or how much to invest, but that doesn’t mean you can’t promote concepts of sound money management such as being frugal and living within your means.

To Mrs. Micah’s & Outlaw’s points however, preaching to the disinterested does no good. Save your help for those that have a desire to make a difference.

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avatar 6 Anonymous

Have you ever read the disclaimer that appears on every single investment website. “…could decline in value.” etc. etc. That’s the right approach to financial advice. Whenever asked, I usually start by saying, I don’t give financial advice and then (depending on the subject) tell them what worked for me and what didn’t work for me. The decision to act on this “non-advice” is theirs and theirs alone. When it comes to family though, I’ll get right down into the weeds with my kids (grown) because that’s what parents do – when asked.

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avatar 7 Anonymous

Nice post Outlaw.

As a person who writes a blog on finance and in the process of becoming a financial planner, it drives me insane sometimes what friends do with their money.

If they ask for help sometimes, I will be more than willing to provide it. Hopefully that day comes sooner than later.

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avatar 8 Anonymous

I think there can be a middle road between letting friends’ lives implode and giving unsolicited advice, but it requires patience and asking neutral questions that cause them to think more in depth about their situation.

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avatar 9 Anonymous

One way to remain uninvolved with friends’ finances is to keep your own finances under your hat. If I don’t go into great lengths about my bank account, I find friends reciprocate.

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avatar 10 Anonymous

Totally agree, unless someone specifically asks me a question, I try to stay out of financial conversations entirely. Of course, for some reason, certain people like to tell you how much money (to the penny!) they have in credit card debt or in an account, how much they spent on their TV, etc. Too much information most of the time, in my opinion.

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avatar 11 Anonymous

Great article, but I have to say point #1 didn’t work well for me. My relative was enraged when I offered advice that I thought was badly needed; that person cut off all ties with me. Now I will hold my piece even with relatives outside my own home!

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