Recently some of my friends (separately) asked if I could give them any specific advice or hints for managing their budget by looking at their earning and spending. Should I only dispense the standard "spend less than you earn" advice and point them to useful links (The Simple Dollar, Get Rich Slowly, right here, ...& lots more) or is it legally ok if I can help them with things specific to them? I am not a finance professional and all that I have learnt is from forums, blogs and my own experience. The reason for asking this, is that I value their friendship and do not want to jeopardize it over advice which they can easily get online, but I also want to help from my own experience and don't want them to just start from the beginning.
asked Nov 19, 2011 at 19:21
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3 Answers
They've asked you, so your advice is welcome. That's your main concern, really.
I'd also ask them how much, and what kind of advice. Do they want you to point them to good websites? On what subjects? Or do they want more personal advice and have you to look over their bank accounts and credit card statements, provide accountability, etc.?
Treat them the same way you'd want to be treated if you asked for help on something that you were weak on.
The counsel of a friend doesn't come with a legal or professional liability.
The key to doing this sort of thing successfully is to respect boundaries. You are providing advice and discussion, not taking over your friend's life.
Legally ok? Sure. Friends frequently discuss financial matters, and share advice. This is quite far from taking money from them and managing it, where at some point you need to be licensed for such things. If you're concerned about giving bad advice, just stay generic. The best advice has no risk. If I offer a friend a stock tip, of course there's the chance the stock goes south, but when I tell a friend who asks about the difference between Mutual Funds and ETFs, and we discuss the expenses each might have, I'm still leaving the decision as to which ETF to him. When I offer the 'fortune cookie' soundbites like "If you are going to make a large purchase, delay it a week for each $100 of value. e.g. if you really want a $1000 TV, sleep on it for a few months" no one can mis-apply this. I like those two sites you mentioned, but the one-on-one is good for the friend and for you. You can always learn more, and teaching helps you hone your skills.
answered Nov 19, 2011 at 22:37
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