James, 25, is expected to make a Madrid exit in the off-season, with Manchester United, Chelsea and AC Milan linked with a move for the playmaker.
Ahead of a crucial season and the 2018 FIFA World Cup in Russia, Falcao urged his Colombia team-mates, including James, to focus on their happiness when deciding their futures.
"For the sake of them and the team, I hope that all who have to make a decision do it in the best way possible and above all that makes them happy," he said, via Sport.
Colombia still have work to do if they are to make the showpiece event in Russia.
While Jose Pekerman's men sit second in CONMEBOL World Cup qualifying, they are just four points clear of sixth-placed Ecuador.
"I have dreamed a lot about the World Cup, which is one of my main motivations to move forward," Falcao said.
"But I do not want to overtake the facts, so if God gives me the opportunity to be there, that day will come."