Last spring, Andy submitted a question he hoped readers could help him with. I promised I’d post it…and then went to Alaska for ten days and forgot. Well, Andy’s a patient man. And persistent. Last week, he dropped me a line again because he’s still wondering: How do you give advice about money to your family (and friends)?

Here’s Andy’s story:

My family had plenty of money when I was growing up, but we never talked about the subject.

My father was always very frugal (a trait I inherited, for better or for worse). I had an allowance, which I would sometimes spend on baseball cards, or other times save up for something big in the future. I guess I kind of followed my parents lead and never really bought overly expensive stuff, or much Stuff in general.

My brother is quite a bit different than me. Throughout college (and even post college) he made some common financial decisions for someone that age and ended up with a lot of debt. Even now that he’s older and has a family, I still feel like he struggles with money. I really, really, REALLY want to approach him and offer him some advice, but I just don’t know how. A similar situation exists with my wife’s father and step-mom. Maybe my apprehension is because these family members are older than me? Maybe it’s easier to talk to people about money who I know manage their money well versus people who don’t?

I feel like I’ve done a damn good job at managing my money during my college and first few post-college years. I feel like I have a lot of good knowledge to share, and I could really help my family members, but money seems to be an awkward and touchy subject in our society. I’m not sure if it’s a personal thing or if it’s this way with everyone — talking about personal finance with (most) friends and family is kind of taboo.

What’s a concerned family member to do? Become a professional financial planner? Bite the bullet, take the bull by the horns (insert your cliche of choice here) and just approach my family members honestly and directly?

In his most recent e-mail, Andy told me it’s not just family members he wishes he could talk to, but friends, too.

“I’ve noticed it’s a pretty big issue among friends as well,” he wrote. “I feel like most of my peers lack financial skills and responsibility. (That said, the flip-side of that viewpoint is that I’m just being a cheapskate, saving too much, and people can spend their money however they want!)”

Outside Looking In
This is actually a situation I wrestle with from time to time. I think we all do. I see friends (and family members) who are struggling, and see some obvious things they could do, but I don’t know how to help.

For instance, I have one friend who refuses to accept responsibility for her income. She’s a smart woman, but she lives in squalor. She blames her state on everything and everybody else. She doesn’t see that she could help herself by being willing to work two (or more) jobs, by avoiding the bars, by giving up cigarettes and pot. In her mind, her lousy income just shows how unlucky she is. It’s not her fault. Any practical advice falls on deaf ears.

I have another friend for whom only the best will do. Though his family is pinched financially (they often complain about money), he constantly talks about the new things he wants — and they’re always the most expensive possible examples. He buys (or wants to buy) the most expensive computers, clothes, and kitchen supplies. He eats at the most expensive restaurants. And so on. I’ve tried to offer casual advice — “Maybe you can find a good deal at a thrift store.”, “Let’s eat at the corner cafe.” — but it’s never well received. Instead, I just don’t say anything.

I wonder if that’s how people used to feel about me back when I struggled with debt? Most people never said anything. Maybe they didn’t see the problem, or maybe they didn’t feel it was their place to share.

Talking with Friends and Family About Money
Why is money a taboo topic? Why aren’t more people willing to talk about their finances? I think it’s because nobody likes to be judged. Everyone thinks they’re doing the best they can possibly do — and even if they don’t think that, they don’t like to be called out.

Often, your friends don’t actually think they’re doing the wrong thing. As Andy suggests, they might think you’re a cheapskate. Each person is in a different place. Though you may have friends and family members who could profit from what you’ve learned, if they’re not ready to listen, you run the risk of doing more harm than good when you offer advice.

In the past, I’ve recommended the following as subtle ways you can help someone who’s struggling:

  • Lead by example. Suggest cutting back on the family gift exchange this year. When you go out to dinner with a friend, choose cheaper alternatives. Bring home books and CDs and DVDs from the library. Don’t make a big deal out of things — just do them. Rather than goad your friends and family into saving, be an example of what can happen through smart money choices. (I talk excitedly about how cutting back on other stuff has allowed me travel, for instance.)
  • Be willing to answer questions. When I was struggling with debt and poor choices, I could see that certain people in my life (such as my wife) had their finances under control. Sometimes I would ask questions. I asked my cousin about mutual funds, and he explained them to me. For a time, I even put money into them. (Then I pulled it out to buy a computer.) Be available as a resource.
  • Use the soft sell. When my friend Michael listened to my complaints about money in 2003, he didn’t make a big deal out of it. He told me his financial story, and then mentioned a book he liked called Your Money or Your Life. He didn’t lecture. He didn’t try to convert me. He simply spent a few minutes explaining how he’d solved his problems, and then he let it go. A few days later, a copy of Your Money or Your Life appeared in my mailbox, and I knew it was from him. That was enough.

I’m curious how other Get Rich Slowly readers have handled this kind of situation. How do you encourage your family and friends to make smart choices with money without making them defensive or angry? What mistakes have you made in the past? What techniques have you found that work? Does a person have to hit rock bottom before they’re ready to listen?

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