A reader asked for advice on helping family with money problems. These tips will help your family deal with debt and other financial problems – without lending money!
Before the tips, a quip:
“Money lent to a friend must be recovered from an enemy.” ~ German Proverb.
Lending money to loved ones is risky and doesn’t always end well, which is why it’s better to find other ways to help family with money problems! If you’re constantly struggling with your family’s money problems and don’t know what to do, read Emotional Blackmail: When the People in Your Life Use Fear, Obligation, and Guilt to Manipulate You. It’ll help you set boundaries — which I talk about below.
And, read on for six ways to help family members who are in debt or have other money problems…
6 Tips for Helping Family With Money Problems
Figure out if you’re contributing to the problem
Sometimes we enable our family by protecting them from the consequences of their actions, or continuing to lend them money even when we know they won’t pay it back. This doesn’t help them solve their money problems – it actually keeps them stuck! For instance, if you lend money and they don’t use it to solve their money problems (by getting a job, stopping the habits that led them to debt, etc) — then you could be enabling. Setting your boundaries is a “tough love” action: you have to decide to stop lending money, or only lend money with clear expectations (for example, that it’s repaid within six months).
Avoid lending money to family
Instead of giving cash or writing a check, find out what your friend or family member needs to survive, and help with that. For instance, you could buy groceries, pay the electric bill, give a gift certificate for gas or a tune up for the car.
Draw up a contract if you lend loved ones money
In Tips for Lending Money to Friends or Family Members, I describe the best way to help your loved ones with money. Don’t just give them money. Make it clear that this is loan is for a specific purpose (paying the bills for a month, taking care of medical problems, etc).
4. Find other ways to help your family. If your loved one is struggling financially because of job loss, then find practical ways to support her. Offer to babysit so she can look for a job, help her update her resume, connect her with employment counselors. Help her set and achieve financial goals, by creating a spending plan or budget.
Offer a hand up – not a hand out
“Providing a hand up – not a hand out” is the motto of the Harvest Project, an organization in Vancouver, BC that I once worked with. The best way to help family with money problems is to give them the tools they need to help themselves. Help them regain their footing and pull their lives back together. Don’t take ownership of their problems no matter how bad, guilty, or sad you feel for them.
Take care of yourself
“We, the family, are constantly having to help them financially, and it is starting to take its toll on all of us financially, emotionally and physically,” says Sharri, a Quips and Tips reader who wants to help her family member who is struggling with money and limited job options. You need to stay healthy, strong, and happy for your own sake. Make sure that you’re giving yourself the emotional and physical space you need to stay centered.
Helping family with money problems comes down to setting boundaries: you need to find ways to help, but not become enmeshed in or contribute to the problem! You also need to step back, look at the situation objectively, and think with your head…not your heart.
If your family member is struggling with debt, read When It’s Not Smart to Loan Money to Someone You’re Close to.
Do you have any thoughts or questions or these ways to help family with money problems? I welcome your comments below…