Advising financially unsavvy family on windfall

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bluebolt
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Advising financially unsavvy family on windfall

Post by bluebolt » Thu Apr 25, 2019 7:33 am

I know the windfall topic has been covered extensively, but this is a different angle. I'm not asking for advice for me on handling a windfall. I'm wondering about how to advise others who aren't BH about it.

My immediate family members are likely to receive an inheritance in the near future. The amount is large relative to their modest incomes and non-existent savings, though it's not high enough for them to stop working or to stop saving for retirement. I want to help them handle this in a way that minimizes their chance of making terrible choices.

My fear is that my advice would not be well received or, even if it is, may not be heeded.

I'm interested in hearing from folks who have been through this and what approaches worked for them. It's less about the specific advice, which I think most BH would agree on: don't make any rash decisions, focus on paying off high interest debt, stabilize finances, avoid lifestyle creep, and LBYM.

student
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Re: Advising financially unsavvy family on windfall

Post by student » Thu Apr 25, 2019 7:38 am

After reading many of these threads, I believe a common advice is do not get involved unless you are being asked especially since you wrote "My fear is that my advice would not be well received or, even if it is, may not be heeded." I think the most one can do is to gift them a copy of bogleheads guide to investing and let them know that you are here to help them navigate financial choices if they want to.

livesoft
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Re: Advising financially unsavvy family on windfall

Post by livesoft » Thu Apr 25, 2019 7:39 am

My main observation is that folks who inherit need to keep themselves out of the clutches of well-meaning people including:
1. People at their bank.
2. People at their church.
3. People in their neighborhood.
4. People who are their friends.
5. People who are their family.
6. People who represent themselves as financial advisors.
7. People who know they have the windfall including the chain of lawyers, accountants, advisors, et al. that it came from.
8. Random people on the internet.

Some of the above can be helpful, but how do they know if any of them are beneficial or are ripping them off?
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Re: Advising financially unsavvy family on windfall

Post by midareff » Thu Apr 25, 2019 7:47 am

student wrote:
Thu Apr 25, 2019 7:38 am
After reading many of these threads, I believe a common advice is do not get involved unless you are being asked especially since you wrote "My fear is that my advice would not be well received or, even if it is, may not be heeded." I think the most one can do is to gift them a copy of bogleheads guide to investing and let them know that you are here to help them navigate financial choices if they want to.
I think this is excellent advice. I have gifted more copies of William Bernstein's book on Asset Allocation than I can count. What I really wonder is how many of them have been read. ,,, but at least I can feel I did try in a very unobtrusive manner.

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FlyAF
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Re: Advising financially unsavvy family on windfall

Post by FlyAF » Thu Apr 25, 2019 7:53 am

People will do with it what they want. No amount of advice is going to stop someone from going out and buying a new car/boat/whatever, NONE. I suggest you just get over the eventual outcome now and move on.

I've been through it. Spouse and their sibling received about 50k each. Spouse just put it in the bank since we're high income and didn't need it, but the sibling is dirt poor and really needed a new car. With a few young kids, a new or gently used minivan would've been smart and to bank the rest, but they ended up buying a sports car that could barely fit the 4 of them. Amazingly they did keep it for 200k miles, but still a boneheaded move. For someone who's never had more than a few hundred or few grand in their possession at any given time, no amount of advice from someone who they perceive as "rich" is going to change what they do with it.

TheDDC
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Re: Advising financially unsavvy family on windfall

Post by TheDDC » Thu Apr 25, 2019 7:57 am

livesoft wrote:
Thu Apr 25, 2019 7:39 am
My main observation is that folks who inherit need to keep themselves out of the clutches of well-meaning people including:
1. People at their bank.
2. People at their church.
3. People in their neighborhood.
4. People who are their friends.
5. People who are their family.
6. People who represent themselves as financial advisors.
7. People who know they have the windfall including the chain of lawyers, accountants, advisors, et al. that it came from.
8. Random people on the internet.

Some of the above can be helpful, but how do they know if any of them are beneficial or are ripping them off?
9. People from the government (to the most legal extent possible)

Forgot one.

-TheDDC
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Ybsybs
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Re: Advising financially unsavvy family on windfall

Post by Ybsybs » Thu Apr 25, 2019 7:59 am

Everyone starts out financially unsavvy and they can become more savvy if it's important to them.

I've had moderate success by emphasizing how much peace of mind a savings cushion can provide and how nice it would be to have a larger sum during retirement.

In this context it seems that you are also receiving a share? If that's so, you might tell them what you plan to do with yours.

Perhaps it's enough for a 14 day cruise right now, but you plan to up retirement savings with the money and in 25-30 years that principal and gains could pay for a similar cruise *every* single year. And also you'd be retired and be able to pick and choose last minute deals which might even let you have twice the cruises per year.

I try to pick a concrete example that the person I'm talking to would actually do. So don't necessarily use cruises if they'd be more interested in attending NASCAR races or winery tours whatever else instead.

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Re: Advising financially unsavvy family on windfall

Post by RickBoglehead » Thu Apr 25, 2019 8:01 am

Find the most concise recommendations for how to handle a windfall and give it to them. I would NOT give them a printout from this or any other website, I'd look through recommended books, especially by noted authors, and find the one that best tells them what to do. It should include not making any hasty decisions, parking the funds in a savings account or money market, etc.

My view has always been that if a relative blows money or invests poorly, then the consequences are theirs and I don't really care.
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Re: Advising financially unsavvy family on windfall

Post by lostdog » Thu Apr 25, 2019 8:02 am

Stay out of it unless they ask you. Some people get offended if you offer financial advice. Also, they may blame you if your investment advice doesn't go well for them if all of a sudden a bear market occurs
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Re: Advising financially unsavvy family on windfall

Post by dbr » Thu Apr 25, 2019 8:06 am

bluebolt wrote:
Thu Apr 25, 2019 7:33 am

My fear is that my advice would not be well received or, even if it is, may not be heeded.
It is even possible what you think is the best advice for them is actually not the best advice.

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Re: Advising financially unsavvy family on windfall

Post by 260chrisb » Thu Apr 25, 2019 8:08 am

I think that unless they are asking for your advice, you don't offer any or even get involved. Being financially responsible is a choice and comes with a level of sophistication. Having said that, folks who are and who have been responsible see the potential failure of those who are not for whatever reason and don't like the thought of them making terrible choices. They're likely to make some bad decisions regardless of advice from anyone including you.

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Re: Advising financially unsavvy family on windfall

Post by stevekozak2 » Thu Apr 25, 2019 8:13 am

I am with other posters: Don't offer advice unless they ask you for advise. Otherwise all you are doing is creating an opportunity for saying "I told you so" when they wind up blowing it all. Not worth it, unless you are just into that sort of thing.

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Re: Advising financially unsavvy family on windfall

Post by Flyer24 » Thu Apr 25, 2019 8:14 am

My Dad is not the most financially savvy. He and his two brothers just inherited 1200 acres of timberland. The land is worth 2 million give or take. This is a lot for someone who did shift work for 45 years. I am not telling him what to do. They are all adults. I am just happy to see him enjoy something after working for so long.

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Re: Advising financially unsavvy family on windfall

Post by Katietsu » Thu Apr 25, 2019 8:15 am

Yes, a book. No follow up conversation unless they ask. But not most of the books talked about on this forum. No Bogle, Bernstein or Malkiel. More like, Dave Ramsey or Jane Bryant Quinn.

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Re: Advising financially unsavvy family on windfall

Post by Jack FFR1846 » Thu Apr 25, 2019 8:17 am

If I could magically direct the actions of these financially clueless people, I'd direct the money as follows:

1: Pay off all bills and debts
2: Pay off mortgage
3: Put the max in Roths
4: Up 401k to max
5: Pre-pay any property tax
6: Send in an estimated tax payment
7: Buy the max in US Savings bonds
8: Pre-pay insurance for the next year

I would expect that the money won't make it all the way to 8.
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Re: Advising financially unsavvy family on windfall

Post by renue74 » Thu Apr 25, 2019 8:19 am

People don't change. If they don't save when they have nothing, they certainly aren't going to save with they have something.

I've learned to keep my mouth shut and not give financial advise. The few times people have asked me about it, I tell them and they still didn't do it.

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Re: Advising financially unsavvy family on windfall

Post by nedsaid » Thu Apr 25, 2019 8:20 am

bluebolt wrote:
Thu Apr 25, 2019 7:33 am
I know the windfall topic has been covered extensively, but this is a different angle. I'm not asking for advice for me on handling a windfall. I'm wondering about how to advise others who aren't BH about it.

My immediate family members are likely to receive an inheritance in the near future. The amount is large relative to their modest incomes and non-existent savings, though it's not high enough for them to stop working or to stop saving for retirement. I want to help them handle this in a way that minimizes their chance of making terrible choices.

My fear is that my advice would not be well received or, even if it is, may not be heeded.

I'm interested in hearing from folks who have been through this and what approaches worked for them. It's less about the specific advice, which I think most BH would agree on: don't make any rash decisions, focus on paying off high interest debt, stabilize finances, avoid lifestyle creep, and LBYM.
Sometimes you can almost see something happen in advance and not have the ability to do anything about it. We all like to believe that we are fonts of wisdom and that others will appreciate our wise advice and our concern. In practice, this is most often perceived as meddling and is not well received. Unfortunately, people often do dumb things with their money and won't take good advice beforehand. People will do what people will do. Folks sometimes have to learn the hard way.
A fool and his money are good for business.

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bluebolt
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Re: Advising financially unsavvy family on windfall

Post by bluebolt » Thu Apr 25, 2019 8:45 am

Jack FFR1846 wrote:
Thu Apr 25, 2019 8:17 am
If I could magically direct the actions of these financially clueless people, I'd direct the money as follows:

1: Pay off all bills and debts
2: Pay off mortgage
3: Put the max in Roths
4: Up 401k to max
5: Pre-pay any property tax
6: Send in an estimated tax payment
7: Buy the max in US Savings bonds
8: Pre-pay insurance for the next year

I would expect that the money won't make it all the way to 8.
I would be happy if they made it through #1. Most of the rest don't apply since they are renters with no savings.

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bluebolt
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Re: Advising financially unsavvy family on windfall

Post by bluebolt » Thu Apr 25, 2019 8:47 am

Katietsu wrote:
Thu Apr 25, 2019 8:15 am
Yes, a book. No follow up conversation unless they ask. But not most of the books talked about on this forum. No Bogle, Bernstein or Malkiel. More like, Dave Ramsey or Jane Bryant Quinn.
Right. I'm not planning on giving them any investment advice. I mainly want them to be able to pay off their bills/cc debt and not be in a worse situation afterwards - e.g. if they bought a car/house they couldn't really afford or went on a big spending spree.

adam1712
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Re: Advising financially unsavvy family on windfall

Post by adam1712 » Thu Apr 25, 2019 8:50 am

The only advice I'd give to someone is to go slow and do things in moderation.

And if they ask, I don't think it hurts to tell them you plan to do things slowly and need to research what you're going to do. Even say an inheritance like this is a little overwhelming.

I'd guess there are many people here that know exactly what they'd do with a windfall, but I can almost guarantee there was a lot of time and research that went into getting to that point. Don't forget that when your instinct is to give a long list of things they should do.

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bluebolt
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Re: Advising financially unsavvy family on windfall

Post by bluebolt » Thu Apr 25, 2019 8:50 am

260chrisb wrote:
Thu Apr 25, 2019 8:08 am
I think that unless they are asking for your advice, you don't offer any or even get involved. Being financially responsible is a choice and comes with a level of sophistication. Having said that, folks who are and who have been responsible see the potential failure of those who are not for whatever reason and don't like the thought of them making terrible choices. They're likely to make some bad decisions regardless of advice from anyone including you.
One of the things I'd like to avoid is being on the hook to help them out later when they've continued to make bad decisions, so I have a vested interest in getting involved even if it has a modest chance of helping. Don't get me wrong, I don't think I'll be able to wave a magic wand and get them to change their ways, but if they did anything to reduce their debt or add to their savings, it would be a big win.

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bluebolt
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Re: Advising financially unsavvy family on windfall

Post by bluebolt » Thu Apr 25, 2019 8:55 am

adam1712 wrote:
Thu Apr 25, 2019 8:50 am
The only advice I'd give to someone is to go slow and do things in moderation.

And if they ask, I don't think it hurts to tell them you plan to do things slowly and need to research what you're going to do. Even say an inheritance like this is a little overwhelming.

I'd guess there are many people here that know exactly what they'd do with a windfall, but I can almost guarantee there was a lot of time and research that went into getting to that point. Don't forget that when your instinct is to give a long list of things they should do.
Good advice.

My instinct is not to give a long list of things to do. It's really about paying their high interest cc debt and giving them a bit of financial stability.

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Re: Advising financially unsavvy family on windfall

Post by NotWhoYouThink » Thu Apr 25, 2019 9:04 am

You might suggest to them that they deal with the debt that is getting their paycheck garnished. And they might buy a new car and take a vacation instead, because when are they ever going to have the ability to do either of those things again?

Because they are not broke for lack of money, it's lack of spending discipline, and you can't fix that. Frustrating, ask me how I know.

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Re: Advising financially unsavvy family on windfall

Post by Murgatroyd » Thu Apr 25, 2019 9:24 am

Sometimes you just need to know when to keep quiet for the sake of relationships.

Case in point with us. FIL left a considerable estate to DW and her sister. Everything was at Merrill Lynch. I knew FIL had done well with his previous broker through specific discussions over the years. But he retired and I suspect FIL stayed put with the replacement due to “time frame” and potentially inertia.

After gaining visibility to his holdings, it was clear recent years were lagging matching benchmarks by as much as 50%. And total fees were averaging 1.8%. In a meeting with just DW and SIL, he put on the big sales pitch for them to stay put. DW said she’d review it with me but that we’d probably combine it with our holdings at Fidelity. SIL agreed to stay.

In discussing the meeting DW and I specifically agonized over telling SIL how bad he was handling FIL’s money. We decided that they are adults and although unsophisticated, it was simply not our place. And more importantly could ruin a great relationship. Everyone still loves each other. (Needs to be said we can’t know a future had we informed them)

My 2 cents.

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Re: Advising financially unsavvy family on windfall

Post by Stinky » Thu Apr 25, 2019 9:29 am

bluebolt wrote:
Thu Apr 25, 2019 8:55 am
adam1712 wrote:
Thu Apr 25, 2019 8:50 am
My instinct is not to give a long list of things to do. It's really about paying their high interest cc debt and giving them a bit of financial stability.
Sounds like the best thing you could do (if you do anything) is to point them toward Dave Ramsey.
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Re: Advising financially unsavvy family on windfall

Post by bsteiner » Thu Apr 25, 2019 9:50 am

Have the person leaving the inheritance leave it to them in trust rather than outright.

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Re: Advising financially unsavvy family on windfall

Post by jharkin » Thu Apr 25, 2019 9:58 am

student wrote:
Thu Apr 25, 2019 7:38 am
After reading many of these threads, I believe a common advice is do not get involved unless you are being asked especially since you wrote "My fear is that my advice would not be well received or, even if it is, may not be heeded." I think the most one can do is to gift them a copy of bogleheads guide to investing and let them know that you are here to help them navigate financial choices if they want to.
+1 Not much you can do, and attempting to help may actually make it worse if they blow it anyway and then blame your advice.

Think of all the stories about lottery winners who ended up bankrupt. Coming into money suddenly usually does not erase a lifetime of bad habits, rather it tends to magnify them :(

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Re: Advising financially unsavvy family on windfall

Post by HomeStretch » Thu Apr 25, 2019 10:25 am

Don’t give advice unless asked. Then be prepared to have your advice ignored.

I would make an exception if I:
- thought I would be asked for financial support after the windfall was spent
- suspected cognitive decline in the recipient
- saw “sharks” circling a close family member that seemed unable to defend his/her windfall from the sharks

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Re: Advising financially unsavvy family on windfall

Post by HomeStretch » Thu Apr 25, 2019 10:25 am

* duplicate *

Topic Author
bluebolt
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Re: Advising financially unsavvy family on windfall

Post by bluebolt » Thu Apr 25, 2019 10:31 am

HomeStretch wrote:
Thu Apr 25, 2019 10:25 am
Don’t give advice unless asked. Then be prepared to have your advice ignored.

I would make an exception if I:
- thought I would be asked for financial support after the windfall was spent
- suspected cognitive decline in the recipient
- saw “sharks” circling a close family member that seemed unable to defend his/her windfall from the sharks
The first might apply. The latter two, probably not.

I think the Dave Ramsay advice earlier in the thread was right. I basically want to advise them to use the money for an emergency fund and to pay off debt. That will leave them in a much better position financially even if they spend the rest of the money on other things.

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Re: Advising financially unsavvy family on windfall

Post by GoldenFinch » Thu Apr 25, 2019 10:39 am

bluebolt wrote:
Thu Apr 25, 2019 8:45 am
Jack FFR1846 wrote:
Thu Apr 25, 2019 8:17 am
If I could magically direct the actions of these financially clueless people, I'd direct the money as follows:

1: Pay off all bills and debts
2: Pay off mortgage
3: Put the max in Roths
4: Up 401k to max
5: Pre-pay any property tax
6: Send in an estimated tax payment
7: Buy the max in US Savings bonds
8: Pre-pay insurance for the next year

I would expect that the money won't make it all the way to 8.
I would be happy if they made it through #1. Most of the rest don't apply since they are renters with no savings.
If they have debt and no savings and have not been interested in finances up to this point, they most likely are going to want to spend the money. It’s nice that you want to help them, but I agree with others that they need to ask you for help or your advice will fall on deaf ears.

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Re: Advising financially unsavvy family on windfall

Post by Grt2bOutdoors » Thu Apr 25, 2019 10:50 am

Jack FFR1846 wrote:
Thu Apr 25, 2019 8:17 am
If I could magically direct the actions of these financially clueless people, I'd direct the money as follows:

1: Pay off all bills and debts
2: Pay off mortgage
3: Put the max in Roths
4: Up 401k to max
5: Pre-pay any property tax
6: Send in an estimated tax payment
7: Buy the max in US Savings bonds
8: Pre-pay insurance for the next year

I would expect that the money won't make it all the way to 8.
All of the above, but would place this piece of advice at the top:

Keep your mouth shut. Don’t tell anyone that you received an inheritance and don’t tell them the amount-no matter how large or small. People will want to “help” them spend it, but more importantly the spending will not benefit those who inherit.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Advising financially unsavvy family on windfall

Post by bayview » Thu Apr 25, 2019 10:56 am

Katietsu wrote:
Thu Apr 25, 2019 8:15 am
Yes, a book. No follow up conversation unless they ask. But not most of the books talked about on this forum. No Bogle, Bernstein or Malkiel. More like, Dave Ramsey or Jane Bryant Quinn.
+1

If asked, suggest Dave Ramsay as well as Jane Bryant Quinn (if they wouldn’t be daunted by the size of her books.)

And I would also say, “Here’s one way to look at this; might give you some ideas to think about”, and give them the link to the windfall wiki. Then congratulate them and walk away.

People generally don’t know what they don’t know. Sometimes a checklist like this windfall wiki can be useful as a things-to-consider reference, even if they choose to not follow it.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Re: Advising financially unsavvy family on windfall

Post by gmc4h232 » Thu Apr 25, 2019 10:58 am

renue74 wrote:
Thu Apr 25, 2019 8:19 am
People don't change. If they don't save when they have nothing, they certainly aren't going to save with they have something.

I've learned to keep my mouth shut and not give financial advise. The few times people have asked me about it, I tell them and they still didn't do it.
+1


My uncle always says "If you're dumb when you're young, then you're dumb when you're old".

It's hard for people who just want to help to accept, but it's very true...

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bluebolt
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Re: Advising financially unsavvy family on windfall

Post by bluebolt » Thu Apr 25, 2019 11:41 am

bayview wrote:
Thu Apr 25, 2019 10:56 am
Katietsu wrote:
Thu Apr 25, 2019 8:15 am
Yes, a book. No follow up conversation unless they ask. But not most of the books talked about on this forum. No Bogle, Bernstein or Malkiel. More like, Dave Ramsey or Jane Bryant Quinn.
+1

If asked, suggest Dave Ramsay as well as Jane Bryant Quinn (if they wouldn’t be daunted by the size of her books.)

And I would also say, “Here’s one way to look at this; might give you some ideas to think about”, and give them the link to the windfall wiki. Then congratulate them and walk away.

People generally don’t know what they don’t know. Sometimes a checklist like this windfall wiki can be useful as a things-to-consider reference, even if they choose to not follow it.
I think this is wise advice and is likely what I will do. If they ask me, I'll point them at these resources. If they don't, I won't offer unsolicited advice.

clip651
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Re: Advising financially unsavvy family on windfall

Post by clip651 » Thu Apr 25, 2019 12:09 pm

Another possibly helpful resource is Suze Orman. I don't agree with everything she says, but she really does a good job of explaining basics - things like debt, savings accounts, CDs, emergency funds, etc. (And she does recommend low cost brokerages, and index funds, for those that choose to invest, though it doesn't sound like your relatives will get to that point.) Look through her current offerings and pick one that has a good overview of the basics. If they prefer videos instead of books, she has those too.

Another thing you might be able to do, is simply mention that you know of a place with good interest rates on savings accounts and CDs (Ally, or similar). That might come across as simply sharing information, rather than telling them what to do. And might open the door if they are interested in asking you other questions. And might get them thinking about savings, and making a bit of money (just interest) on their money.

Good luck, you're in a tough spot of wanting to help, having the ability and knowledge to help, but not necessarily having a willing audience.

cj

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Re: Advising financially unsavvy family on windfall

Post by 6bquick » Thu Apr 25, 2019 3:29 pm

NotWhoYouThink wrote:
Thu Apr 25, 2019 9:04 am
Because they are not broke for lack of money, it's lack of spending discipline, and you can't fix that. Frustrating, ask me how I know.
This. One of my Dad's oft-quoted pearls of wisdom is "money don't fix money problems." Not an infallible rule, but pretty close I'd wager.

MathWizard
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Re: Advising financially unsavvy family on windfall

Post by MathWizard » Thu Apr 25, 2019 3:53 pm

I give advice to my kids. Kids expect (or at least tolerate) advice from parents, whether they act on
it or not is another matter.

This who are not financially savvy, do not take the advice well.

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Re: Advising financially unsavvy family on windfall

Post by Dottie57 » Thu Apr 25, 2019 5:32 pm

The “IfYouCan.pdf” is very short. Give them a copy and tell them it was written for young people but it does pertain to others.

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Re: Advising financially unsavvy family on windfall

Post by 2marshmallow » Thu Apr 25, 2019 7:24 pm

Maybe a soft approach, but boy this will be hard to put modestly - "If you would like the advice of someone who has had the good fortune to handle similar amounts of money, I'd be happy to help."

Cheers,
2marshmallow

Dave55
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Re: Advising financially unsavvy family on windfall

Post by Dave55 » Thu Apr 25, 2019 7:33 pm

You can't confer a benefit on an unwilling recipient.


Dave

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Re: Advising financially unsavvy family on windfall

Post by coachd50 » Thu Apr 25, 2019 7:51 pm

bluebolt wrote:
Thu Apr 25, 2019 10:31 am
HomeStretch wrote:
Thu Apr 25, 2019 10:25 am
Don’t give advice unless asked. Then be prepared to have your advice ignored.

I would make an exception if I:
- thought I would be asked for financial support after the windfall was spent
- suspected cognitive decline in the recipient
- saw “sharks” circling a close family member that seemed unable to defend his/her windfall from the sharks
The first might apply. The latter two, probably not.

I think the Dave Ramsay advice earlier in the thread was right. I basically want to advise them to use the money for an emergency fund and to pay off debt. That will leave them in a much better position financially even if they spend the rest of the money on other things.
Why would you feel obligated to help out ?

Here is the hard part though. Since the overarching theme of this thread is "don't give advise to someone who doesn't ask for it because that generally isn't taken well, and can cause issues" , how do you approach this situation?

It certainly won't be taken well if you approach them and basically communicate "Hey, here is what I think you should do, and don't bother asking me for help if you don't listen to my advice"

Just a tough situation for you all around here.

pdavi21
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Re: Advising financially unsavvy family on windfall

Post by pdavi21 » Thu Apr 25, 2019 7:54 pm

Don't.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

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bluebolt
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Re: Advising financially unsavvy family on windfall

Post by bluebolt » Thu Apr 25, 2019 8:33 pm

coachd50 wrote:
Thu Apr 25, 2019 7:51 pm
bluebolt wrote:
Thu Apr 25, 2019 10:31 am
HomeStretch wrote:
Thu Apr 25, 2019 10:25 am
Don’t give advice unless asked. Then be prepared to have your advice ignored.

I would make an exception if I:
- thought I would be asked for financial support after the windfall was spent
- suspected cognitive decline in the recipient
- saw “sharks” circling a close family member that seemed unable to defend his/her windfall from the sharks
The first might apply. The latter two, probably not.

I think the Dave Ramsay advice earlier in the thread was right. I basically want to advise them to use the money for an emergency fund and to pay off debt. That will leave them in a much better position financially even if they spend the rest of the money on other things.
Why would you feel obligated to help out ?

Here is the hard part though. Since the overarching theme of this thread is "don't give advise to someone who doesn't ask for it because that generally isn't taken well, and can cause issues" , how do you approach this situation?

It certainly won't be taken well if you approach them and basically communicate "Hey, here is what I think you should do, and don't bother asking me for help if you don't listen to my advice"

Just a tough situation for you all around here.
I feel obligated to help out because it's my family and because I can. They've helped me out in non-financial matters and are incredibly generous with their love, their time, their attention. Their strengths just happen to not be in financial management, budgeting, etc.

For example, I was really sick years ago and my family flew in to be at my side during surgery, illness, etc. I'm sure they didn't think about budget, work, or anything else, they just knew they needed to help. So now, given the opportunity to be helpful to them in a way that I can be, shouldn't I offer my help? The trick is that it may not be well received, and I'll have to navigate that, but I hope I can do it in a way that is received the way I intend. I still will plan on offering with a very soft approach and not do any hard sell.

student
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Re: Advising financially unsavvy family on windfall

Post by student » Thu Apr 25, 2019 8:44 pm

bluebolt wrote:
Thu Apr 25, 2019 8:33 pm
I feel obligated to help out because it's my family and because I can. They've helped me out in non-financial matters and are incredibly generous with their love, their time, their attention. Their strengths just happen to not be in financial management, budgeting, etc.

For example, I was really sick years ago and my family flew in to be at my side during surgery, illness, etc. I'm sure they didn't think about budget, work, or anything else, they just knew they needed to help. So now, given the opportunity to be helpful to them in a way that I can be, shouldn't I offer my help? The trick is that it may not be well received, and I'll have to navigate that, but I hope I can do it in a way that is received the way I intend. I still will plan on offering with a very soft approach and not do any hard sell.
Thank you for this important info. It seems that these are nice people who are bad with money, and you are also a very nice person and and you want to repay them. The problem that I see is your statement "My fear is that my advice would not be well received or, even if it is, may not be heeded." This indicates to me that your help maybe a fruitless exercise. I think the best that you can do is gift them a Dave Ramsey book or his program.

DarthSage
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Re: Advising financially unsavvy family on windfall

Post by DarthSage » Fri Apr 26, 2019 6:42 am

My suggestion is that you talk with them about what YOU plan to do with the windfall. "This is a bit of a shock to me, too. First, I'm going to keep quiet and put the money in savings for a few months, while I think about longer-term plans. I hope to put some away for retirement, pay off any debts, maybe splurge on a newer car. But, I want to think about it, first, so I don't waste it."

This comes across as good thinking--not telling them what to do, but musing on what choices you'll make. Perhaps your retirement accounts are in good shape and you have no current debt--wonderful! The message they really need to hear is that you're keeping quiet, waiting, and trying to balance how to utilize the windfall. I would probably throw in a mention of an interesting book I've been reading (pick the one already mentioned that you think would be best-received).

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sunny_socal
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Re: Advising financially unsavvy family on windfall

Post by sunny_socal » Fri Apr 26, 2019 7:10 am

I wouldn't say a thing. I also have plenty of "financially unsavvy" immediate family members and I know exactly what they would do: spend it all. How do I know this?
- Credit cards perpetually maxed out
- Cars impounded every few years since they couldn't pay the credit card bills
- Regular trips to Vegas ("we don't gamble... much")
- No problem with destination weddings
- Latest phones, fancy plan
- Cable
- Eat out all the time

livesoft
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Re: Advising financially unsavvy family on windfall

Post by livesoft » Fri Apr 26, 2019 7:12 am

student wrote:
Thu Apr 25, 2019 8:44 pm
The problem that I see is your statement "My fear is that my advice would not be well received or, even if it is, may not be heeded." This indicates to me that your help maybe a fruitless exercise. I think the best that you can do is gift them a Dave Ramsey book or his program.
And giving them a Dave Ramsey book will be well-received? I found that kinda funny.
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cherijoh
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Re: Advising financially unsavvy family on windfall

Post by cherijoh » Fri Apr 26, 2019 7:22 am

Katietsu wrote:
Thu Apr 25, 2019 8:15 am
Yes, a book. No follow up conversation unless they ask. But not most of the books talked about on this forum. No Bogle, Bernstein or Malkiel. More like, Dave Ramsey or Jane Bryant Quinn.
Have you read Bernstein's If You Can? It is perfect for a newbie. Although I would second the recommendation for a Jane Bryant Quinn book.

student
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Re: Advising financially unsavvy family on windfall

Post by student » Fri Apr 26, 2019 7:25 am

livesoft wrote:
Fri Apr 26, 2019 7:12 am
student wrote:
Thu Apr 25, 2019 8:44 pm
The problem that I see is your statement "My fear is that my advice would not be well received or, even if it is, may not be heeded." This indicates to me that your help maybe a fruitless exercise. I think the best that you can do is gift them a Dave Ramsey book or his program.
And giving them a Dave Ramsey book will be well-received? I found that kinda funny.
It may or may not be but I think it will be better received than advice directly from the OP. It seems that OP really want to help due to his/her encounters with these family members. My point is out of all the possible actions (not including non-action), this is likely to be optimal.

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