5 Simple Rules for Giving Friends Financial Advice

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5 Simple Rules for Giving Friends Financial Advice

Being a personal finance blogger and someone who avidly tracks her finances, sometimes I find it hard not to share my opinion on peoples finances. It drives me up the wall when I hear people laugh at how they’ve maxed out their credit cards or brush off that they are carrying a balance. Carrying about my money is important to me, but that isn’t the case for everyone. With that being said, there are a few times I’ve been caught in a position where I know someone is making a poor money decision because they aren’t educated… not simply because they don’t care. In cases like this, I try to do my very best to “give financial advice” to be helpful, not critical.

If someone in your life is making poor financial decisions, it may be time to call them out. It isn’t always easy to give unwanted advice, and sometimes friends will be irritated with your unsolicited advice. My take on it is that if it’s a friend or close family member I should try and help inform them so that they don’t end up wasting their money.

Some simple rules for giving financial advice.

#1. If you are in a situation where someone is making a bad financial decision, do not tell them they are wrong. Calling someone out only makes them defensive. Talk about a time where you made or heard of someone making a similar choice and what the repercussions were. Make sure you add in something like “I’m not trying to tell you what to do, I just thought you might want to know.”

#2. Be understanding. Most people find money a taboo subject, and in my opinion it really shouldn’t be, but that doesn’t make it any easier to talk about. Encourage your friends to share their financial triumphs as well as their hardships with you and be understanding when they are finding it hard to deal with something. That being said, you should also celebrate with your friends when they hit major financial milestones!

#3. Offer to help them with a plan. This is the best and least intrusive way of helping people. I will always offer to help friends build budgets or spreadsheets to track savings goals. By doing this your friend will see it as you trying to help them achieve a goal instead of belittling them for a bad decision.

#4. Be aware of their lifestyle. If you know one of your friends is deeply in debt or they make a comment that they are eating out too much or always going over their budget… TAKE THE HINT. When hanging out suggest a more frugal option, like cooking dinner together or having  a movie night in. Your friend will appreciate that you aren’t helping them overspend and you can chat about ways to be frugal over your budge-friendly night in!

#5. Realize ultimately it’s their decision. Regardless of what you do, people will do with their money what they like. The most you can do is attempt to educate, and offer your help. If they choose not to take it, you can’t take it personally.

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Janine is a young 20-something who is passionate about personal finance. She is actively pursuing her professional designations to make personal finance part of her career. Janine created My Pennies, My Thoughts to document her journey to financial freedom and help her readers get there as well! Join her as she tries to conquer the financial world by the time she's 25!