Mixing money and family is not always recommended. It can stir up more problems compared to it helping. If your family reaches out to you up for a loan, how do you set effective boundaries with them? After someone asked for advice, I grabbed the ten best tips from the discussion to help with the situation.
1. Know Thyself Financially
Consider letting the person know clearly if you cannot lend money. However, remember that you are not obligated to lend money, and it is okay to prioritize your own financial well-being. You can always be transparent by admitting destitution. Someone rightly mentioned that people are less likely to ask a favor of you if you yourself are in a pickle.
2. Take Care of Your Heart
Many people discussed how lending money caused extreme distress or even depression. One user recalled being severely depressed when their relatives did not return the favor. Remember to view your time and energy as finite resources.
3. When in Doubt, Fib it Out!
Remember that a little white lie can go a long way if you’re in a real pinch. As someone suggested, tell them you’d help if you could, but unfortunately, you’re currently living like a pauper. So, technically, you are just being honest about not having a surplus after you’ve allocated your finances to your primary areas of expenditure.
4. Set a One-Time Gift Amount
Consider setting a one-time gift amount with the understanding that they can never ask for money again. Now, remember that you have to be strict with this boundary. As one person mentioned, if you have lent them money despite their continued violation of your boundary, separate your feelings from the matter and put it to a stop.
5. Don’t Mingle Love and Loans
Be honest about your concerns that lending money may harm your relationship. Money can make things messy, and you don’t want it to come between you and your loved ones. One user mentioned the value of being explicit in your apprehensions regarding loans and relationships.
6. Consider Non-Monetary Assistance
If the person you’re lending money to has poor spending habits, try giving non-monetary assistance instead. For example, one person recounted how their parents would use the money to buy low-quality items and lotteries. As per suggestions from several people, you could buy groceries or other necessities to help instead.
7. Consider Setting Up a Written Agreement
Contracts might sound dramatic, but they are more than just legal documents. As one person mentioned, you can set up a written agreement with stipulations to keep a record for your own sake. This will omit any potential for confusion.
8. Be an Adviser, Not a Lender
Maybe not all relatives are villains. Some may be genuinely in need of help. In that case, you can help them by reviewing their finances with them. One individual suggested weighing out multiple plans and discussing the options.
9. Recommend Credit Counseling Services
If the concerned person genuinely requires assistance, you can recommend debt/credit counseling services. As one person warned, steer clear of any debt relief or loan consolidation services – those are usually total scams.
10. Stop Lending Money Altogether
It might be time to cut off those mooching relatives if all else fails. Suppose your relatives have consistently never paid back or gone as far as to make you feel guilty for not lending any. In that case, it’s best to stop giving out money to them entirely.
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