Should you intervene if someone you know makes a financial mistake?
A friend or family member just told you about the next financial move they’re planning to make and you know it’s a bad idea. Instinctively, you wanted to yell “Don’t do it”, before they even finished their story, but common sense held you back.
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Giving financial advice can be tricky, due to the often taboo nature of conversations about money. While it is sometimes appropriate to speak up, it is not always the case.
Jodi RR Smith, president of Mannersmith Etiquette Consulting based in Marblehead, Mass., Said the right way to go – or not – is actually deceptively simple.
“As with all other life advice, the best way to start is ‘Would you like some advice?’” She said. “Then if the answer is ‘no’, you keep your opinions to yourself. And if the answer is “yes”, you can share your wise advice.
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However, she said there are exceptions to this rule.
“If this is someone you will feel morally obligated to save if their finances crumble, then you should consider having a conversation – even if they don’t want to listen,” he said. she declared.
Someone you are extremely invested in, such as a child, might deserve your unsolicited advice.
“For example, your young adult offspring wants to take out loans to start an alpaca farm,” she said. “Due to the fact that they don’t know anything about alpacas or farming, there’s a good chance they’ll ask to live in your basement within a year,” [so] you should talk to them in advance.
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Not only limited to your children, Smith said other loved ones could benefit from your perspective on their situation as well.
“[If] your elderly aunt decided to take out a third reverse mortgage on her house and if one of these banks decided to foreclose she would be homeless and live in your spare bedroom, you should talk to her ahead of time, ”he said. she declared.
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For best results, Smith advised being aware of how you are structuring the discussion.
“This conversation begins with, ‘I know you are a competent adult, but this is an important decision and I just want to be sure that you are well aware of the financial risks of …” “she said.
Additionally, she said if the person has made some questionable financial decisions in the past and then asked you for money, you would want to resolve this ongoing issue using the same approach.
Talking about money is often awkward, especially when you tell someone you think they’re making a mistake. Being kind and respectful in your performance can improve the outcome of the situation because the other person will not feel assaulted.
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Try to put yourself in their shoes as you craft your response. Although you might think they are making a glaring mistake, they clearly don’t share this sentiment.
Therefore, it is important to make them feel heard and to be empathetic to their cause. It might even be helpful to suggest an alternative idea that doesn’t require the same financial investment, i.e. opening an art gallery on Etsy instead of renting physical space.
In the end, you can do your best, but you may not be able to convince the other person not to make the financial move that you are sure is a mistake. In this case, do your best to support yourself, and if things don’t work out, bite your tongue to avoid saying, “I told you so”.
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Last updated: August 16, 2021
This article originally appeared on GOBankingRates.com: Should you step in if someone you know makes a financial mistake?