Sometimes it may seem that everyone has their hand out and is asking you for money. Navigating the delicate balance between family and finances can be challenging. To help you handle these situations, I've gathered 12 expert tips from business owners, life coaches, and HR professionals. From suggesting alternative financial options to setting boundaries and offering support, discover how to effectively communicate with your family members when they ask to borrow money.
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Setting Boundaries for Lending Money to Family
Teach Money Management Skills
Each of us must learn the power of choices. Family members who ask for money all the time are people who tend to have poor money management skills. They spend their money on what makes them feel good instead of focusing on their needs first.
I offer to help them with money management skills. I share that if I give them money, I am hurting them and me. I will share that we can set up a Zoom if they want help with money management. People who see you as an easy way to get money will decline the meeting. The best part is that they will tell the other family members what you said to them.
This technique has gotten me off the ask-for-money list quickly. I also make random comments around family members about my borrowing money policy. It took me years to learn this. Now, I get hints for money, but not direct asks. Now I have money for the spa and vacations!
Beth Smith, Life Coach and Owner, Thriving With Resilience
Alternative Ways of Teaching
So, what if your family doesn't want to hear your advice? Recommend a self-help book that can help them learn how to manage their finances. I Will Teach You to Be Rich: No Guilt. No Excuses, can help them learn the basics of money management in a few short weeks. You can let them know that you read the book and that it's helped you manage your finances successfully and that it can also benefit them.
Help Them Explore Income Options
Instead of just saying no, offer to help out in other ways. If they are always borrowing because they're jobless, offer to help them look for a job or assign tasks to help them earn money. If they need money for groceries, you can donate some of your groceries or offer to buy some groceries for them to get them to their next paycheck.
Most importantly, suggest possible ways to make more money, such as establishing side hustles, finding cheaper alternatives, and exploring additional job opportunities. You can also impart some of your financial wisdom and point them in the right direction for budgeting and money management.
Gary Gray, CFO, CouponChief.com
Communicate Boundaries Openly
If your loved one keeps asking you to borrow money, take a deep breath. You can handle this. The best way to handle it is to have an honest conversation. Tell them how it makes you feel and why.
Tell them that it makes you uncomfortable or that they may not pay you back. Be clear about your boundaries, and be willing to listen to theirs.
Then, come to an agreement and decide together what you can do to help each other out financially. You can set up a payment plan or agree to pay back the money within a certain amount of time. Whatever you decide, make sure that you both understand the agreement and are comfortable with it.
Matthew Ramirez, Founder, USMLE Test Prep
There are times when you can say yes and times when you just have to say no and stay firm on your decision. When to Say Yes, How to Say No To Take Control of Your Life can help you learn how to set boundaries and say no more often. I've used this book when setting boundaries at work and in my personal life. It's helped me to gain mental clarity and to learn not to overextend myself or my finances.
See my feature in Breaking the Stigma: Getting Comfortable Talking About Money
Set Lending Limits
Talking about finances with family members can be difficult. However, it's important to establish clear boundaries with your family members, particularly if someone is asking you for endless financial support.
I suggest that you outline what you can help with and what you're unwilling to do. For example, you can offer forms of non-financial support if you feel comfortable doing so. This could include helping your family member improve their resume or search for a new job. Alternatively, you could have them over for dinner or take the time to ask them how they're doing.
The key is to then set a rigid boundary for giving money. This could look like this: "I can support you in your job search and be there for you when you need me, but I don't feel comfortable lending you money."
You don't have to apologize or provide additional justification. And this type of answer still provides support and assistance without requiring monetary assistance.
Tom Blake, Founder, This Online World
Be Firm and Empathetic
It can be uncomfortable when family members continuously ask to borrow money. To handle this situation, take a firm but empathetic approach.
Start by setting clear boundaries and communicating your financial situation. Tell them you have financial goals and priorities you must adhere to. Offer to help them in non-financial ways, such as guiding them in their financial journey or helping them find resources for financial assistance. Remember, it's okay to say no and prioritize your finances.
Jefferson McCall, Co-founder and HR Head, TechBullish
Ask Why They Need the Money
Asking your family members why they need the money they are constantly asking for can create a dialogue for open conversation. Your family member may respond and let you know they are going through a financial hardship and require your assistance to bridge the gap until they can cover their expenses. On the other hand, your family member may not have an answer and may constantly ask you for money because you openly provide it to them.
Whatever the response is that you receive, establish boundaries around continually supporting your family members financially. This is especially important if lending money to your family is causing a financial strain on your finances. Asking them why they need your support can uncover other underlying issues or concerns. You can be that resource that can help them reduce the need to borrow money and get them on the right track financially by having wealth-building conversations.
Annette Harris, Owner, Harris Financial Coaching
Stick With Honesty
As uncomfortable as it will be, being honest and direct is the only way to deal with family members asking to borrow money.
Something simple and honest can look like, "I'm sorry, but I'm not able to lend you money right now. I know I did before, but if I keep doing this, I'll be in a bad spot financially." If they are a good family member, they should not pressure you to burden yourself with their financial troubles after it is clarified that it will be problematic for you.
Even though something along those lines is a respectful response, it's possible that family members will respond with anger or spite. This will hurt, but you have to stick to your boundaries—if you cave now, you will only have to face the same decision and problem again later. Instead, work with family members to find alternative ways to support them, such as helping them look for other sources of financial assistance.
Khamani Murphy, Social Media Marketing, Achievable
Promote Financial Literacy
When family members ask you to borrow money, staying firm within your boundaries is hard. An uncommon response could be to remind them of the importance of financial literacy and offer to help set up a budget they can stick to. Financial literacy means understanding personal finances, such as how much one earns, spends, saves, invests, and gives away.
By helping a family member create an effective budget that incorporates all aspects of financial health, you are allowing them to make more informed decisions about their funds over time. This could prove invaluable in establishing better spending habits and allowing greater financial security for your loved ones in the future.
Julia Kelly, Managing Partner, Rigits
Use Humor to Discourage Requests
To discourage family members from asking you for money, complain about it constantly. Whenever you see them, always mention how expensive something is or you can't wait for payday.
Illustrating you are short on cash as a preemptive measure works much better than having to think of an excuse on the spot if they ask you for money.
Your mention of money, or lack thereof, should discourage anyone, especially family members, from adding to your woes.
Or better still, ask them first. Nobody has ever responded to a "Can I borrow money" question by asking to borrow money back!
Aiden Higgins, Senior Editor and Writer, The Broke Backpacker
Share Financial Planning and Limits
One helpful way to respond to family members' requests for borrowing money is to explain your financial plan and boundaries. Share with them that you have set a clear budget for yourself to be financially responsible and maintain stability. Let them know that this plan includes a limit on the amount allocated for lending money to others, ensuring that you can meet your and your immediate family's financial needs.
By explaining your financial planning and priorities, you showcase your fiscal responsibility and encourage them to adopt a similar approach while setting clear boundaries on lending money.
Basana Saha, Founder, KidsCareIdeas
Let Them Know About Your Financial Situation
When your family members ask to borrow money, it's important to communicate clear boundaries to prevent misunderstandings or strained relationships.
Be honest and straightforward about your financial situation and set a specific limit on what you are able and willing to lend. Also, suggest alternative solutions such as creating a budget or seeking the aid of a financial counselor or support group. Remember that saying no doesn't make you a bad person or a bad family member. It's a powerful act of self-respect and self-care.
Tarun Saha, Co-founder and CEO, StallionZo
Offer Support Within Reason
Explain to the family member that you are uncomfortable lending them money and inquire if there are other non-financial ways you can support them.
For instance, you could say, "I'm not entirely comfortable loaning you any money. Are there other ways I can support you?" This way, you can set clear boundaries with the concerned family member while still coming off as supportive and empathetic to their struggles.
Dr. Willy Portier, Co-founder, Concerty
What's Next?
Offering guidance on managing household finances can benefit individuals and families alike. To ensure financial stability, it is important to prioritize and budget your expenses when family members seek your financial support. Advise them to seek professional advice or financial aid services to help them manage their finances and achieve their goals. Taking proactive measures towards financial management and preparing yourself for these situations can reduce stress and establish a secure financial future for yourself and your loved ones.