Here’s an email I received from Karen (used with permission) and my response:

Hello Ron, thanks for all you have written on money and personal finances. I have been going through your archives and printing some out and sending others to friends ^[2] of mine. One of these friends ^[2], I’ll call her Cloe, is about to make a really stupid decision with her money and I don’t know what to do. How do you keep someone from making a very bad personal finance decision?

If you don’t have time to answer, I understand. I hope you can tho!

My response:
Hi Karen. It sounds like you care for your friend’s well being and she’s fortunate to have someone like you on her side.

^[3]

I started to ask you what the decision was, but later thought, “It doesn’t matter what the decision is. A bad decision is a bad decision!”

The real question you’re facing, since your friend is an adult is:

How far do you go in allowing someone to fail?

The answer depends on several things:

• How serious will the mistake really be? Spending too much on a dinner at a restaurant isn’t the same as signing a 120 month note for a $65,000 car at 23 percent interest when you make $10.45/hour.
• It also depends on where this person is in her life. Where is she in the learning process? What does she “get” and not “get?” Some people just cannot be taught ^[4] and if she is one of these, life will just have to teach her.
• How much weight do YOU carry in her decision making processes? Obviously, you’ve already tried to dissuade her from this decision, but it hasn’t worked yet.

Don’t confuse “giving advice” with “stepping in.” Advising your friend before she makes the decision but allowing her to make it is entirely different than “stepping in” and forcing the issue. Many times with our children, we’re tempted to “step in” and prevent their failure, and many times we give in to that temptation, but when you’re dealing with adults, “stepping in” takes on a different meaning. It really is a judgment call.

Friends ^[2] give advice all the time. Many times we just give it without being asked! I think it’s important though, when you’re dealing with adults, that you tread carefully here. Many times you can give advice by simply asking questions:

“What IS the payment going to be on that new boat?”

“Are you sure about the long term implications of this decision?”

“Can you get out of this contract if things don’t go so well at your job in the next couple of months?”

“Have you looked at any alternatives to your 6 week vacation cruise in the Greek Islands?”

“Are you going to need to make extra money ^[5] because of this decision?”

Karen, I hope you can keep this one thing in mind when it comes to friends ^[2] and money: Her choices on how to spend her money will never be the same as yours or mine. However, they are not wrong, they’re just different. Her choices reflect her personality, her priorities ^[6], and her passion ^[7]; and she is, of course, free to make her own decisions. As a friend, all you really can do is ask some hard questions in a gentle way and hopefully steer her in a smarter direction, and hopefully, a wise direction!

photo ^[8] credit: Coach O. ^[9]

[tags]children, choices, decisions, finances, money, priorities, responsibility, teaching[tags]

About the author

Ron has written 1083 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal ^[10] in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a partner in a national building materials company.

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