11 Ways You Can Set Strong Money Boundaries With Your Family

By Chika


Last Updated: November 29, 2022


So many of us want to find a way to help out financially when a family member is in need, but at what cost?

Putting financial restrictions in place on parents or siblings who have contributed so much can cause conflict.

Money is usually an emotional topic, so setting and discussing monetary boundaries with family members can be challenging. Many of us find it challenging to refuse a family member's request. Still, combining family and money can be challenging, particularly when all you want to say is "no."

It's vital to know when to establish clear limits and to decide what kind of assistance you will provide and under what conditions. This clarifies the situation and eliminates all potential monetary misconceptions.

In this post, we'll look at tips and insights on setting financial boundaries with family members



11 Tips on Setting Strong Money Boundaries With Your Family

1. Check Creditworthiness.

One of the factors you have to consider is the creditworthiness of the person.

Does the person have a track record of mismanaging money or the person is a victim of a mishap?

They could be experiencing illness or accidents, messy divorces, loss of job or passing through a difficult phase in their life. You should consider whether the person who is asking for your assistance is dealing with a unique crisis or a long-term financial drama.

Considering the person's past will enable you to put things in a better perspective. If the person has a history of misusing money, chances are you are only indulging the person in their bad habits and shielding them from the results of their actions. Also, there is a low probability of getting your money back. 


2. Spare What You Can Afford to Lose

Sometimes it's hard to turn down the request of a family member.

But what do you do when the person cannot or refuses to pay? When considering a request, only spare what you can afford to lose. That way you wouldn't feel pain when the person cannot pay back, and you still get to preserve your relationship with the person - at least non-monetarily. 


3. Give Part of the Loan

When approached with a loan request, do not give the complete amount.

You can give a portion. This way you still get to lend a helping hand, and not still put your finances in jeopardy. For example, if your sibling asks for a $1000 loan, you can opt to give half of that amount. 


4. Saying 'no' May Help 

Sometimes saying 'no' can be the best way to go.

Most people are afraid that turning down a financial request will hurt the feelings of others, so delay in giving an outright answer. This is wrong because the longer you delay in giving an answer, the more you raise the hopes and expectations of the lender.

Saying no is simple and straight to the point and does not raise the expectations of the other person. It also puts your mind at ease knowing that you have 'handled' the issue.


5. Show Empathy

There are also occasions when you have to balance rejection with empathy.

This tends to soften the blow of turning down a request for financial assistance. Look for ways to convey the message that you feel the predicament of the borrower and you are willing to help but you can't.

Some may appreciate you for being outright honest with them. 


6. Become Comfortable with Upsetting Other People.

Because they don't want to disappoint them or risk tarnishing the relationship, people frequently find it difficult to say "no" to family members in need.

But having boundaries inevitably leads to upsetting other people.

People get irritated whenever you try to create reasonable boundaries. People frequently worry most about offending others, but they should be more concerned about complying with a request that makes them uncomfortable.

No one's ability or willingness to support the other party financially should be a prerequisite for that person's love, acceptance, and tight links to their family.


7. Keep it Strictly Business

Lending money is a business transaction, not a social one.

If you treat it that way, the encounter will probably go a lot more smoothly. Make a written agreement outlining the terms of repayment, including interest (which need not be at bank rates, but should at least be low to serve as an incentive to pay on time), and have both parties sign.

To keep track of what each of you owes and what the other owes, you should each maintain a copy and post it on the fridge.


8. Don't Expect Favors in Return

It's quite appropriate to compensate the person who needs money to complete activities around the house or business.

Earning the money you require won't do any harm. Don't expect the borrower to go out of their way to assist you with anything, though, if that wasn't part of the original agreement.

Sure, lending someone money and repaying them in other ways is the right thing to do. But not everyone feels that way, and it's unfair to put those expectations on gullible individuals.


9. Do not Give in to Emotional Blackmail

People who are in need of money will occasionally go to great lengths to persuade you to support their way of life.

Be persistent. Don't let the pathetic justifications and crocodile tears get you down, particularly if the dramatics are coming from someone you wouldn't trust with a loan.

Emotional blackmail usually comes from a sense of entitlement, as family members may want to remind you of what they have done for you in the past, or how they have stood by you in difficult times.

While this may be true, a genuine request does not need to resort to underhanded tactics of playing with your emotions. 


10. Don't Dip Into Your Savings

If you can't afford to fund a personal loan from your disposable income, you can't afford it.

Simply said, you can use your savings for anything you wish, which includes saving for financial emergencies and new investments. You should not let anyone deprive you of what you have worked hard to obtain. After a courteous explanation of the situation, the matter should be closed.


11. Don't Borrow

Many people borrow to help a family member out.

This is never sound financial advice. You are not only taking on multiple risks that may not pan out for you. What if the borrower cannot meet up with the loan commitments? This puts you in a precarious position of having to repay the loan with interest.

It also affects your credit score and reduces your chances of getting a good deal when you need a loan. Borrowing for a family member means that you are taking on more risks than the original lender. There is no point in helping someone out financially if it compromises your financial integrity. 



Final Thoughts

One of life's most difficult decisions is whether to lend money to family members.

On the one hand, you want to assist a loved one who is struggling financially. On the other hand, you are aware that things might not go off without a hitch. The choice to lend that money-filled helping hand is ultimately yours, but if you decide to be a good Samaritan, it's important to keep these rules in mind.

Photo by Karolina Grabowska


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