A friend or family member has 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’ve 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 surrounding money. While sometimes it’s appropriate to speak up, doing so isn’t always the case.
Jodi RR Smith, president of Mannersmith Etiquette Consulting based in Marblehead, Massachusetts, said the right way to step in — or not — is actually deceivingly simple.
“As with all other life advice, the best way to begin 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 sage 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 should their finances go south, then you should consider having a conversation — even if they do not want to listen,” she said.
Someone you’re extremely invested in, such as a child, could warrant 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 know nothing about alpacas or farming, there is a strong chance they will request to live in your basement within a year, [so] you should speak with them in advance.”
Not just limited to your kids, Smith said other close loved ones might also benefit from your take on their situation.
“[If] your elderly aunt has decided to take out a third reverse mortgage on her home and if any of these banks decide to foreclose, she would be homeless and living in your spare room, you should speak with her in advance,” she said.
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For best results, Smith advised being cognizant of the manner in which you structure the discussion.
“This conversation starts with ‘I know you are a competent adult, but this is a big decision and just want to be sure you are well aware of the financial risks of…'” she said.
Additionally, she said if the person has made questionable financial decisions in the past and then asked you for money, you would want to address this ongoing issue using the same approach.
Discussing money is often awkward — especially when telling someone you think they’re making a mistake. Being kind and respectful in your delivery can improve the outcome of the situation because the other person won’t feel attacked.
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Try to put yourself in their shoes while crafting your response. While you believe they’re making a glaringly obvious mistake, they clearly don’t share this sentiment.
Therefore, it’s important to make them feel heard and 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 leasing a brick-and-mortar space.
Ultimately, you can try your best, but you might not be able to convince the other person not to make the financial move you’re certain is a mistake. In this case, try your best to be supportive, and if things don’t work out, bite your tongue to keep from saying, “I told you so.”
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