Being able to help people in times of financial need is a sign that you are in control of your own finances. This means that you have extra available resources, which you don’t need at the time and may just help fix someone else’s problems.
It’s a totally different story, however, when you start becoming the “go to” person of your friends and family members who are having financial hardship. While it’s good to have a generous heart, it may not be healthy anymore when they start treating you as a lending institution.
How Do You Set the Limits on Financial Assistance?
It all starts when someone close to you, a friend perhaps, approaches you for help. Because you thought it’s her first time to ask for a loan, you’d have no second thoughts about lending some cash as long as she pays it back. Time comes when she needs to return the money and she returns the exact amount. But at about the same date on the following month, she comes back to borrow again.
You on the other hand, have difficulty saying “No” to people so the cycle of dependency begins.
A different twist applies when it comes to family members. Perhaps a jobless sibling often asks for help with his groceries or rent. You know it’s becoming a burden to your finances as well, but you feel guilt if you cut the financial aid. The family member now becomes dependent on you and somehow expects you to bail him out every month.
Stop and think
It’s great to be able to help someone untangle himself from a single mess. But when he starts to become your repeat customer, asking for a loan month after month, then that’s the time to stop and think….
- Why is this guy always in a state of financial need?
- When will this stop and what can I do?
Helping him the same way over and over again will not really help him overcome his situation. If poor money management is the root cause of his problem, then the money you lend is just a quick fix, not the real solution.
Besides, you will only be putting a strain into your relationship as money is a notorious cause for destroyed friendships.
Learn to say “NO”
This might be easier said than done for many people. When someone comes knocking again into your door for help, the N-word just won’t come out. You want to be kind and to be able to help. And you feel a tinge of guilt if you don’t do so.
In this case, you might have to think about your welfare as well. You don’t want to manipulated and be taken advantage of. You also have your own family’s finances to manage, and you don’t want to become the shock absorber of other people’s financial stress.
If you don’t learn to say no, they will keep coming back because they believe that it’s perfectly fine with you and that it’s easier to turn to you.
Help him identify the root cause of his financial problem
Instead of doling out cash, why not offer an advice that will get them out of the dependency loop? You might want to offer budgeting or grocery shopping tips instead. Teach him or her how to save even a little every month and build an emergency fund.
He may come out empty-handed after your money talk but who knows, he might just be able to solve his problem on his own? You only had to push a button inside his head.
There is, however, a polar opposite to the above-mentioned scenarios. And that’s when it’s you who feel the need to support someone. Case in point: your adult kids.
Let go of the kids
Some people feel the need to support their kids even up to their 30s. For them, financial support means love; if they abandon that “duty” they feel they are bad parents.
But when you stop supporting your kids financially, a mutual benefit actually happens for both of you. Your adult child will learn to become financially self-sufficient and you will have more breathing space for your own finances. He or she will be able to learn how to budget her own money, manage her credit and pay her rent and bills on time – a few survival skills that are necessary during adult life. You will now be able to focus on building your retirement or getting out of debt.
Now for some of us, setting limits for financial assistance to our families may be a sensitive dialogue especially when financial aid has never been questioned before, and when the family works as our support system in our financial struggles.
However, when it quite obvious that you are also having difficulty with your own finances, taking on debt after debt just to be able to help, then it’s important that you set boundaries for financial help.
After all, you cannot help someone else if you cannot help yourself first. If you do, you will forever be facing hardship, or you will both sink soon enough.