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Do you know a royal financial pain? Add to ...

Sarah Ferguson, the Duchess of York, is a financial train wreck. She recently admitted to owing money to three friends and three businesses. Apparently all her income streams stopped cold after she was famously exposed for accepting a fake bribe.

You don't have to be a royal to be a royal financial pain to the people around you. Not uncommonly, we hear stories about those who don't play well in the financial sandbox, who are seemingly oblivious to the basic nature of money management.

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Late with rent or mortgage payments, constantly borrowing money from family or friends, or just living a champagne lifestyle on a beer income, they always seem to justify their actions by pointing the finger. But as the saying goes, when you point the finger, there are three other fingers pointing right back at you.

What's so hard about the notion of spending less than you earn? You can be financially successful without having to learn math beyond a Grade 6 level, so spending less than you bring in is not a difficult concept.

What makes it hard for many people is the psychology, and what makes it dangerous for some is a pathology. Overspending and compulsive shopping can in the most severe cases require treatment from medical professionals.

Cheap credit has effectively created a financial equivalent to substance abuse but without mainstream recovery programs like Alcoholics Anonymous. There is one organization, Debtors Anonymous, that caters to overspenders, but the local meeting could be hundreds of kilometres away.

If the money problems are severe enough that someone you care about is hurting themselves, one option is to have a financial intervention. Gathering a group of loved ones to confront someone is not an easy task. It requires courage. But there are many online resources available that explain the right and wrong ways to approach interventions of all types. You may also be able to find a local counsellor who has experience with debt-related issues to help.

If the money problems aren't severe enough to justify a 12-step program or intervention, sometimes the best friend you can be is one that doesn't act as an enabler. That means standing firm the next time they ask for money, or suggesting cheaper forms of entertainment when you get together. Simply saying, "I can't afford that" can help them realize that everyone else's lives are not carefree as they might think.

Putting your nose in other people's finances can change a relationship forever, and not always for the better. It's not a decision to take lightly, but if your friend's or family member's money problems start to interfere with your relationship, you might not find yourselves playing in different corners of the sandbox, you might find yourselves in different sandboxes altogether.

Preet Banerjee is a senior vice-president with Pro-Financial Asset Management. His website is wheredoesallmymoneygo.com

Follow on Twitter: @preetbanerjee

 

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