How can I help my friend who is bad with money?

Today’s question comes from Vinny. He asks:

“I’m in a really good place financially so I’m coming to you for advice to help my friend. I met him in college and we are still very close going on 4 years since graduating. I’ve noticed he doesn’t save money and spends carelessly. He has picked up a second income to keep up with his lifestyle inflation although he still lives pretty simply.

Even though he has a degree he is not pursuing anything in his field and still holds a similar job he had in high school and is looking for the next menial job. How do I help him start saving and eventually investing? And how do I help him to a more…mature career for lack of a better word?

I have sent him some of your posts and talked to him but I think he feels it is a daunting task to find the money to save. His dad is at retirement age and is realizing that he should have saved for his future. And as you know 62 is not the best time to start thinking about saving for retirement.

He has no debt (I recently convinced him to not carry a balance on his credit card), but also no savings, and is talking about buying a house. I don’t think he will ever be very hands on with saving or investing so I have told him how simple it is to start with a separate savings account with an automated weekly transfer but I don’t think he even is doing that yet.

I want him to be in a better place financially. I know it would alleviate some of the stress in his life. So how do I help him? Thanks for all the value you provide to me and many others.”

You can’t tell him what to do. He has to figure it out on his own. And usually the only time people are motivated to figure things out on their own is when their life falls apart. If that doesn’t happen he might never change.

His dad is just realizing how important it is to save for retirement. He was never forced to figure that out, and now he’s 62 and it’s too late. But he survived this long and he’ll make it work because he has to.

To help your friend with his money and his career you need to set the example. This is what you can do in situations like this: Be the example and hope they follow.

That means sharing your results. And more importantly, sharing what you’re learning to get those results.

You’re booking that trip you always wanted to take. And paying cash. Because awhile ago you set up an automatic transfer of $100 a month to a separate savings account until there was enough to cover it.

You’re learning it’s critical to invest in your 20s. There’s this thing called compounding. That means your money starts making money. And then that money starts making money. And on and on. So investing even tiny amounts of money now has a huge impact later.

You’re figuring out what your strengths are and what value you have. Your value is in the way you think, and your approach to solving problems. And when you have a clear understanding of your strengths you can convey that to make more money.

He will see all this, and if he wants what you have he’ll start doing what you’re doing. Because you always become like the five people you spend the most time with.

And that’s why you surround yourself with people who are like what you want to be like. If you want to be fit you get friends who are fit. If you want to start a business you get friends who are business owners. If you want to advance your career you get friends who are career focused.

If you hang out with the people you’ve always hung out with they will want you to be the same person you’ve always been. And if you start to change they will hold you back because it’s threatening to them and to their ego. I see it all the time.

Anyways, I have a friend who says, “I could really learn from you,” and I’m starting to see him change. And I know I can’t make him change because you can’t change other people. But what you can do, if you care about them, is be the example and hope they follow.