When Mixing Family And Finances, You Need To Set Firm Money Boundaries First
The following column is the opinion and analysis of the writer, Katharina Buczek.
In life, unfortunate (and expensive) things just happen all the time– from lost jobs and car accidents to illnesses and messy divorces. But, when a tragic incident impacts someone in your family, they might come busting down your door and asking for money.
If you want to help them out and feel like you are in a financially stable position to do so, that’s great! Otherwise, it can feel completely overwhelming to set (and stick to) firm money boundaries.
It’s important to remember that you’re not alone in this situation, though, and many people have had to draw the line between family and money. Here are some key steps for making this distinction that may help you save your sanity in the process.
1. Understand Your Own Financial Situation
This may sound obvious, but take a good, hard look at your financials. How much cash do you have flowing in and out of your account, and where do you stand on certain goals and obligations– such as saving or paying off your mortgage?
Be honest with yourself, even if you genuinely want to help a loved one out. Adding family into the mix when you’re not able to manage your own finances will only create a scary storm that you are not prepared to handle.
2. Communicate Clearly
Once you nail down your financial status, it’s important to understand the scope of your family member’s situation. Figure out why they need the money, what it’s for, and if they have any intention of paying you back.
DavidPrado – stock.adobe.com – illustrative purposes only, not the actual person
Don’t be shy about asking these questions. Ambiguity and assumptions will only lead to missed expectations and strife down the line.
You shouldn’t be afraid to open up about your perspective, either, since you don’t have to sacrifice your own financial well-being to be supportive.
3. Set Firm Boundaries
Once you’ve had time to consider your loved one’s situation, it’s time to set some boundaries. The term “boundaries” scares a lot of people since it sometimes comes with a cold connotation. But it’s not about being harsh; it’s about being responsible.
Let your family know what you are willing to do and what you’re not willing to do in clear terms. Perhaps you’ve decided you can lend them a small amount of money, or maybe you realized that you could only afford to offer some advice. Whatever it is, just be direct and concise. Then, stick to your word.
4. Get It In Writing
If you decide to lend some money to a family member, always get the agreement in writing. Yes, it may seem formal, and it might even feel awkward to ask for a contract between you and a loved one.
Nonetheless, this step is crucial for ensuring clarity and avoiding any misunderstandings later on.
You don’t have to go crazy with this step– just get the critical details down on paper. Then, you can rest assured that you and your family members are on the same page.
5. Manage Your Emotions
If you decide not to give a family member some funds, you may be confronted with some anger or upset. Unfortunately, money tends to stir up plenty of emotions– even in families.
Still, just try to keep your cool and don’t budge even if other people try to make you feel guilty. Remember, you are making decisions that have the potential to directly impact your financial health and livelihood. You shouldn’t feel selfish for looking after yourself.
6. Learn To Just Say No
This final step is much easier said than done. But you just have to realize that saying “no” to a family member in a tough situation doesn’t mean you don’t care about them.
Sometimes, it is actually the most responsible thing you can do, and it doesn’t make you a bad person.
Always keep in mind that money boundaries with family are like dancing on a tightrope, and it’s not easy. But it’s doable, and it might just save you a heap of headaches in the future.
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