Many emphasise relatives too much, I am afraid. They argue that siblings, cousins, parents, grandparents and such relatives must matter the most in our lives. I disagree. Siblings enjoy a great childhood together, but growing apart is the norm. Education, job and family keeps them away and much of one’s adult life is spent without any meaningful participation of the sibling.
Then there is rivalry. Unexpressed envy. The stinging differences in position, status, popularity and so on. Siblings suffer these emotions mostly without speaking about it. Or denying them. And some bring them all out in the open and treat one another rudely and harshly. Parents, grandparents, uncles, aunts and all others are part of one’s life only in a breezy peripheral manner. Some of them inspire; some serve as role models; some expect too much; and some are tough to please.
I would ask friends to play a game that was introduced to me many years ago. Close your eyes and think about three most joyous and unforgettable experiences of your life. Make that list. Don’t reveal it. Now tell me how many of them feature a parent. Be honest. For most of us, the answer is none. It is not as if parents are not important. It is just that they end up in the gallery cheering for us, when we are old enough to play our game. They simply can’t be there in the field with us. They are not meant to be there either.
There is no discounting the relationships we enjoy in our lives. But the involvement of relatives in our adult lives is quite limited, for most of us. They do not have the context or a clear appreciation of the kind of person we have become as we grow older, to offer advice, make decisions, or show us the path. We are mostly on our own; we lean on our spouse or partner. Or we lean on friends.
Our friends stay with us. We choose them. We align with those we enjoy being with. We allow our experiences to help us judge whom we like to stay with and where we like to move on. We know whom to turn to and when. And friends know us for who we are. Real friends have seen the good, bad and ugly sides of us; stayed with us through thick and thin; and know us when we succeed and fail. They enrich our lives in so many ways. Our personal finances are much better because we have friends. Let me put down a quick list.
First, friends are our touchstones before we can correct our financial habits. They know when we spend too much; they tease us to death if we are too stingy; they can tell if we are lying about our incomes; they know if we are being exploited by someone else; and they point it out to us. They show us the mirror. True friends stake everything to tell us what we are doing wrong.
Second, there is always a friend for every specific need we have. There is one that solves relationship issues; there is one that offers career guidance; and there is one that helps us sort our financial issues. Before we make decisions about investing, trading, choosing stocks and funds, or joining the bandwagon with others, there is the wise friend who will hold our hands and tell us as it is. For someone who can lure and mislead, there is another to offer the tough and wise alternative.
Third, in a crisis when we are unsure what life holds next, a friend is our confidante. We worry about being judged by others; we worry about upsetting immediate family. An unpaid spiraling credit card debt; the careless loan pile up; the struggle with containing expenses; the impending job loss; the unexpected investment loss; and the unraveling personal guarantee that backfired are all problems that need a friend’s calm ear.
Fourth, special situations in life require the presence of a trustworthy partner. Someone who will make decisions just like we would have. Helping the spouse claim insurance benefits and investing the money when we are gone; Taking charge of the trust funds to ensure that our disabled child is protected after our time; implementing our living will and ensuring our illness does not deplete the family’s wealth; and ring fencing our sudden riches to ensure it is responsibly deployed. These are tasks that require a trusted friend.
You get the drift. There may be some who are blessed with great relationships with their siblings who can perform these roles for them. But for most of us, even with great relatives and siblings, friends matter more. They come in to offer solace, hear our woes, do what needs to be done, and help us pick ourselves up.
The only kind of friends that one would steer clear of, are those that always seem to be in need of a hand loan. Much of what friends do in our financial lives are in the form of the right advice, counsel, direction and sharing of responsibility and burden. However strong the relationship, there would hardly be transactions of borrowing and lending. Friends happily spend for the other; many won’t keep accounts or count pennies. But most don’t seek loans. Not routinely.
Habitual borrowers don’t return the money. When a friend asks for money, the rule is to give what you can afford to not expect to be returned. Anything more you are likely to lose the money and the friend.
So it is with joint ventures. While many close friends stick together through the thick and thin of running an enterprise, such is the strain of decisions going wrong in a young business, and so intertwined the functions of an enterprise, that even the best relationships are severely tested. Some endure and get stronger; many don’t.
Friends make our lives so much richer by their candour about who we truly are. Our financial lives are surely much better with those who stand by us, hold us back from making foolish calls, and offer assurance when things fail.
(The author is Chairperson, Centre for Investment Education and Learning)