Penny For Your Thoughts: Tips for Friends with Bad Money Management Skills?

This post is part of our “Penny For Your Thoughts” column where readers can write to Penny about any questions related to money, finances, relationships, and more. If your question is chosen for the next Penny For Your Thoughts Column, you will receive a $20 Amazon Gift Card. In addition, one lucky commenter on today’s column will receive a $15 Amazon Gift Card.

Dear Penny,

A friend of mine who I see frequently is constantly out of money and has very poor money management skills. She laughs about forgetting to pay her credit card bills until a debt collector calls and about eating cereal for dinner until the next paycheck. I haven’t always been the best with money myself, but it makes me uncomfortable that she’s clearly unable to handle her finances, and I worry about how she’ll manage in the future. I don’t want to offend her, but should I offer to help her?

–A Concerned Friend

Dear Concerned Friend,

If your friend is making jokes about her financial situation, instead of blithely acting like this is normal, she probably already has an inkling that this is not the wisest path to be heading down. I know it’s hard to watch your friends make mistakes, but you don’t want to become her financial nanny by watching over her too closely. If she asks for specific advice, you can certainly give her your opinions, but you never really know what exactly is going on with someone else’s finances, so I would advise against offering unsolicited advice unless your friend hints towards needing it.

The help she needs, and the best thing you can do, is to be a good example for her. If you’re concerned about the money she spends when she’s with you, you can suggest lower-cost or free activities. She might be thinking of making changes to her spending, but doesn’t want it to seem like it’s her fault that you have to go to the local dollar store. You can be the impetus for change. Whatever you do, do not fall into a pattern of paying for things for her and absolutely do not offer to lend her money unless she is in dire circumstances. You want to help her learn to stand on her own two feet and make good choices; you also don’t want her to inappropriately assume that you support her bad choices. Moreover, lending money to family and friends is a horrible recipe for disaster.

As a friend, you can be a great resource for her if she knows you’re willing to have these kinds of conversations. It sounds like she’s open to talking about it if she’s made a few mentions here and there. Admitting some of your own financial mishaps will help you find some common ground and make her feel more comfortable talking about her situation. Most of all, what your friend needs from you is to see that there is another way to deal with financial challenges and to know that she doesn’t have to let her mistakes rule her life.

Yours truly,


Readers, a penny for your thoughts! What have you done as a friend to help out in a bad financial situation? Was your friend offended or overjoyed?

Do you have a question about relationships and money? Write to Penny [at] moneycrashers [dot] com and win a $20 Amazon Gift Card if your question gets chosen! And one lucky commenter on this post will win a $15 Amazon Gift Card!

Update: The winner of the $15 Amazon Gift Card is Scott, with his comment shown below.

  • Tim @ Faith and Finance

    Hi Penny –

    Situations like this one can be tough to handle. I’ve had a friend with lots of debt and was comfortable asking them if they wanted some help in sorting it out. They accepted my offer because I didn’t say it in a demeaning way and they also knew that I loved talking finance (they didn’t like talking about it at all). We worked out a plan and now she’s managing her debt well – all because we stepped back and took an objective approach to her situation.

    Being a good example is the best advice I know. If you show them that it’s possible to eat on less, save more, and pay down debt, you might encourage them more with your actions than you would with words!


  • Ernest S.

    I helped a friend with her budget several months ago who was in crisis. I actually bought her a license for a popular budgeting program for her birthday. I wasn’t sure if she was going to be insulted. Instead, she embraced the help and is feeling much more empowered.

    We also made a mutual arrangement to help reduce her debt and help my wife and I with our time. We pay her to cook 3 meals a week for us. The money that she earns can go straight to reducing her debt, and gives us less stress when it comes to making healthy meals during the week. Since she loves to cook, and cooks daily, it is an easy way for her to earn some extra cash dedicated to debt reduction.

  • Beating Broke

    I’d have to echo the thoughts that paying for anything for her is a bad idea as is lending her money.

    I think that people make the mistake of being to “padded” with their responses to stuff like that for fear that the friend will get mad or that they’ll lose the friend altogether. If the person is really your friend, and you’d do anything for them, even lay your life on the line to protect them, then why wouldn’t you do the same for their financial life and be more blunt with them about the missteps that they are making. You can’t change them, but you can help guide them if they decide to change. Yes, you might lose a friend, but you also might end up with an even better friend too!

    • Penny

      If you’re close to your friend, and you’d stand up and help them in any other situation, I agree you should be able to talk about anything with them and bring up their financial well being with them. If they are offended at first, sometimes they’ll feel differently a few days later having slept on it.

  • Stephanie C

    When my sister was in financial trouble, I told her how contacting a no-fee consumer credit counseling service helped me when I first divorced. I looked up a few and gave her the information & she did use it!

    When my daughter wants to buy or do something for me as a gift, I ask her if she could come over and cook something for me. We end up having a great family time together and I hope she sees how always going out to eat is a money waster.

    When my son first moved out on his own, I took him grocery shopping trips to show him where I shopped, which places had the best prices on what items. It gave him a chance to see where the stores are, how they are laid out and what he needed – bags to pack his groceries in, a quarter deposit for get a shopping cart, etc.

  • Stella

    Agree with advice not to lend money–you’d only be enabling the financial irresponsibility as well as ultimately resenting your perpetually broke friend for her poor spending decisions. One thing that was helpful for a fiscally clueless friend of mine was to show him how to make a simple budget. Just the concept of taking one’s monthly take home pay and subtracting known recurring expenses like rent, car payments/insurance, etc. was a real eye-opener for him. Might help with her poor money management skills to realize where her money is going and what most likely needs to be trimmed from her expenditures (daily lattes, cable, weekly shopping sprees…).

  • Peter S

    If I come across something like that, I’ll tend to mention Dave Ramsey and his advice. I’ve even offered to lend out the book, though the principal is pretty easy to state. Save up an emergency fund and leave it for just that – emergencies. Pay off your bills in smallest to largest order and stop using your credit card until you get it under control. Reward yourself with a small reward when you pay off a bill, then resume. It works and it works even better if you follow Dave’s “gazelle-like intensity” philosophy (which I haven’t mastered). Depending on how close I am to them, I can go into more details, but just sharing that I’m slowly getting out of debt following that plan and the freedom that it offers is a good start.

    If they’re somewhat serious, I’d recommend getting an account on as well to really see what they spend money on. I knew a newly married couple – the wife wondered where all of the money went. The husband indicated that it was going out through the Debit card. She doubted that so they started dropping their receipts for debit card spending into a bowl. The next week, the bowl stayed mostly empty and they found they had money. Keeping track of that spending makes a huge difference. :-)

    • Penny

      Lending a book is a great way to get your friend started without having to have a long discussion about it if they’re sensitive about the subject. Mint can be a painful experience for those with serious debt (seeing it all totaled up in one place!) but it’s one we all need to have!

  • Heather

    I have brought up finances in conversation and just talked about what I’m doing and how well it’s working. This has been especially easy recently, as we changed how we were budgeting and it’s working great! If they want to know more, they’ll ask, either in that moment or they’ll bring it up later.

    Other than that, there’s not much you can do, I don’t think. Everyone needs to take care of their own issues…

  • beth

    Have some money direct deposited from your paycheck to a seperate savings account. I’ts out of your sight before you get a chance to touch it.

  • Bobbi

    Hi Penny,
    I would sit her down and talk to her if you feel comfortable doing that. Obviously she is comfortable talking to you about finances. I think the best tip would be to get her on a budget. As soon as she sees where her money is actually going, she should really be shocked enough to want to change her lifestyle.:) Good luck!

  • Scott

    There are lots of ways to help your friend get organized, and a common theme will be to use some tool to figure out how much you’re actually spending and where it’s going. However, there’s often learning curve and setup can be a headache (e.g., getting setup, particularly if you’re not already doing online banking everywhere).

    One of the easiest thing you can suggest, that involves no initial change in spending patterns, is to record everything in a check register. You might have a bunch extra you can give your friend, or you could just stop by your bank and I expect they will give you one just for the asking.

    Treat this new register as a spending log, and maybe initially use “informally” as a combination of all you’re friends accounts. She gets some money, she writes it in the log. She spends some money, she writes it in the log. If she’s got a mobile phone, then she can use the calculator on the phone if she’s not inclined to get the math correct.

    This has several benefits. First, if she uses it for everything, she’ll have a good picture of what she has or how much she owes. Second, like the common suggestion to use cash exclusively, by recording everything, the purchase and the amount are then fully realized. You can’t just swipe and go; by writing it down you’re going to have to pay attention to what you just spent and how it impacted the bottom line.

    Third, the great things about a check register are that its free and it easily fits into a purse or pocket, and thus you have the option right at the point of purchase to “realize” your spending. You don’t have to remember to come back to it later. It’s easy to do, has near zero learning curve, zero setup, and only requires a pen and a bit of arithmetic skill.

    Hopefully after some initial success, your friend will realize that paying attention to finances is important and be ready for bigger steps, like Quicken or; but if she tries something bigger first and gets frustrated due to setup, learning curve, or actually remembering to do it, it will just reinforce to her that she’s not capable of getting a handle on her finances.

  • Olivia

    We have a family member who depended on being “bailed out” by an older sibling. The older sibling died and now no one else is coming to the fore. This member resents us and expects us to give more than we can for Christmas (cash) as she is always in a crisis situation. At one point she asked us about how to budget, but that went nowhere. We don’t have a lot of money we are just very very frugal.

    Then we have a friend deep in debt. He earns as much as we do and we are a family of four. He will not make the lifestyle changes needed to get a grip.

    There is nothing you can do for someone unless they really want to make the changes needed.

  • Anissa

    This can be a very tricky issue. I’ve had friends who spend money like there is no tomorrow, and then complain about how they are always in debt. My best advise to them was to use the site to track all their spending and accounts so they can actually see what they are doing and stop the bad habits. This actually worked somewhat well as it didn’t come across as me preaching to them. I simply told them about this great free resource that we loved and let them see the eye opening details themselves…teach a man to fish and all ;)

  • Wendi P

    I agree with Peter S. Dave Ramsey has very sound advice for getting yourself out of debt. I would also empathize with my friend and also ask if her if she really wants all of that financial stress in her life. It takes a big commitment to make a budget and stick to it but the payoff is HUGE. Financial freedom is all about peace of mind!

  • Emily

    I’d show him/her how I manage my money, not necessarily directly criticizing her for her poor choices, but nicely showing him/her alternatives, such as setting up a budget, using online programs like Mint to track her accounts. I’d also offer to help him/her stay social while not spending tons of money (you can be frugal but don’t have to be a hermit). Things like going for a walk in the park, having a movie night in with friends instead of going to the theater, hosting potlucks instead of going out to fancy restaurants. If I felt s/he’d be receptive, I’d help him/her to focus on what debts needed to be paid off first, look at expenses and see what could be cut, etc.

  • Debra

    Money is a touchy subject for a lot of people, and we don’t educate our kids enough about how to handle finances as a society. You can ask her if she’d like some help and/or suggestions, but I wouldn’t give unsolicited advice, because she might be offended by it. I’ve noticed that some people only want to hear advice when they’re ready to hear it, and some people only want to hear advice from people they see as experts. So she may not want your advice but might be more interested in hearing what someone like Dave Ramsey or a financial advisor might say.

  • gina

    I agree with setting a good example. But I also think as a friend you could say something like ‘I used to have trouble managing my money, but I found that doing a few relatively easy things has really helped’. Hopefully, she will take the bait and it will open up a whole conversation about very small things she could do to turn around her financial situation.

  • not given

    Buy 2 small notebooks and pens. Give one to her and tell her you’re going to write down every penny you spend on anything by any method for a month so you can see if there is anywhere you can save money. Challenge her to join the game.
    At the end of the month go through them together. You could say things like, well I bought several bottles of water from a machine $1@ If I buy them at the grocery by the case and bring chilled bottles with me when I go out, I could save $x per month. (Or buy a reusable water bottle, etc.) I think I’ll do that and use the money to save up for Y. Or, I’m thankful I have my online payments set up so I never forget one and have a late fee on any of my bills.
    It’s also possible she’s just disorganized or ADD.

  • Jacob LaFountaine

    I find it a trap. Talking with someone about their money issues just isn’t worth the trouble

  • Jefferson Faudan

    it’s quite useless talking to those people really… some people simply do not have any respect over their “word of honor”