How to Help Loved Ones with Money Problems
When family or close friends are in trouble, it’s natural to have a desire to help. However, when dealing with finances, you should take a few precautions before jumping in. For instance, do you know lending money isn’t always the right option? The tips below will help you evaluate different scenarios and develop the appropriate course of action to help loved ones with money problems:
Don’t Cross Boundaries
Has your loved one reached out to you for assistance, or are you assuming he or she needs your help? If family members or friends haven’t asked for help, they may not want or need it. They may prefer to climb out of a difficult situation themselves. If you feel assistance is necessary, consider bringing up the topic indirectly. For example, you can comment on a news story about debt or housing troubles, or you can mention a few financial tips you recently received from a friend.
Determine Whether Assisting is the Right Move
It’s not necessary to bail friends and family out of all financial problems. In some cases, it can even be a hindrance. First look at the cause of money troubles. Did your teen run up a credit card splurging at the mall, or has an unexpected injury led to a pile of medical bills? Determine whether there’s a vital lesson that needs to be learned. If the money problems are the result of poor choices, the individual may need to take the time and effort to pay off the bill themselves in order to prevent it from happening again. If financial difficulties were caused by outside sources, such as job layoffs, a financial boost may be beneficial.
Evaluate Your Options
When helping loved ones with money problems, lending money is one option, but it’s not the only option. You may be able to help your loved ones help themselves. For instance, you can babysit children or clean the house while your loved one works an extra shift or side job. You can also help family and friends develop a workable budget or find professional assistance. Credit counseling is a free service from non-profit organizations like Take Charge America that educates consumers about their options for overcoming debt and saving for the future.
Gift, But Don’t Enable
Gifting money is appropriate if you are willing, in a financial position to do so, and the gift doesn’t enable poor behaviors or make the borrower dependent on you for more cash in the future. Everyone deserves the right to become independent. Gifts that make someone dependent on another can seriously strain personal relationships and ultimately cause more harm than good.
Lend Money with Caution
If you believe lending money is the best option, proceed with caution. First take an honest assessment of your finances to determine whether you’re in a position to lend. Then, put it in writing.
If your loved one is struggling with problem credit card debt, suggest our free credit counseling. We can help them figure out a budget and action plan to start reducing their debt load.