When Mixing Family And Finances, You Need To Set Firm Money Boundaries First

DavidPrado - - illustrative purposes only, not the actual person

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 – – illustrative purposes only, not the actual person

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