Sometimes family get-togethers mean uncomfortable money conversations. Joanna and Johnny of Our Freaking Budget share how they manage expectations when family members ask for money.
You know what’s great about Thanksgiving? Food. You know what’s also mostly great about Thanksgiving? Family. (We can all thank an unruly uncle or two for that mostly qualifier — you know whom we’re talking about.)
And you know what’s not so great about sitting around a dinner table with food and family? The inevitable and entirely inappropriate discussions/arguments about politics, religion, and money that many families engage in. And to make matters worse, there’s no empty chair at the kids’ table to retreat to.
Can you please pass the strongest drink available? Thanks.
We’re all fortunate that the awkward exchanges around the turkey and gravy happen but once a year, but sticky situations involving lending money to family are increasingly more common as we journey through adulthood. Most of our encounters have been as innocent as spotting a sibling $20 for an overpriced hot dog at a football game. But we soon expect weightier family money matters, like helping to support aging parents who aren’t adequately prepared for retirement.
So, what are we supposed to do? Our family means everything to us. We would do anything to help them, right? But what if helping our family means putting our own financial well being in jeopardy? These are the questions that Joanna and I wrestled with—and with each new circumstance, we found ourselves feeling less confident about our lending decision than the last one.
Exhausted with it all, we finally sat down and realized we needed to get on the same page and establish some ground rules around lending money to family. It was a grueling process with lots of emotion spilled and Skittles consumed (our stress-eating weapon of choice), but we knew if we took the time to get it right then and there, we’d remove the headache and heartache of weighing out future decisions.
Here’s a peek into a few ways we plan to respond to family money issues.
We Never Make Loans—Ever
Well, that’s certainly blunt. And it might even sound a bit cold-hearted, but let me explain. When it comes to family, we’re softies. We know it. And as we were discussing our ground rules, we knew that when push came to shove, we would lend our families all the money they need—even if we couldn’t afford to. But we also know that we’re very trusting—if someone says they’ll do something, we expect them to do it. So if we loaned a family member our hard-earned money, we’d expect them to pay it back. And if they didn’t, we’d probably feel betrayed, our family member would feel embarrassed, and a big ugly wedge would sit between us. If you spend a little time researching this topic, you’ll find countless stories of frayed relationships and estranged parents, children, and siblings.
So we decided we’d never lend money to family. But that doesn’t mean we would never give our family money. Notice the subtlety? Lend versus give. If we felt compelled to help a family member (which means it doesn’t break any of our other ground rules), we would give them the money and assume we’ll never see it again. If they are able to return any—or all—of our gift, that’s great. But we won’t expect or rely on it for our own needs. All emotional attachment to that money would be sacrificed to maintain healthy relationships.
Help Yourself Before Helping Others
During the flight safety instructions before takeoff (you know, the thing you ignore every flight), the flight attendants remind passengers to secure their own mask before helping others, like children. As a father of two young girls, I find this is hard advice to hear, let alone comprehend. The wisdom in this instruction is that if in the process of trying to secure your child’s oxygen mask you lose consciousness, you can’t help your child, yourself, or any other children or passengers. By being selfless, you actually jeopardize the safety of those you’re trying to help by not helping yourself first.
This advice extends beyond the unlikely event (0.00001 percent probability, to be specific) your plane crashes. Joanna and I decided that we needed to have our own financial house in order before helping others. For us, that means having a six-month emergency fund, being current on all bills, and having a stable income. If those criteria aren’t met, then we’re unable to help. The only thing worse than one family member succumbing to financial trouble is a second member being dragged down in their attempts to help.
Make the Terms Clear
As a child of the 90s, I loved the movie Blank Check. The story goes that a young kid is given a blank check, he fills it in for $1,000,000, and bam, he’s buying what every 12-year-old kid desires! While it’s not a concern we have with lending money to family (because how many Super Soaker and NERF guns does an adult really need?), we figured there’s likely a better way to help than handing over a lump sum of cash.
To best know how to help, we would want to better understand the situation: how much money is needed, for what purpose, and whether it’s recurring. Knowing the answers to those questions would help us set clear terms of what we could contribute, how often, and to whom. In most situations, we’d much rather help them avoid the temptation of using that money for other expenses by writing a check out directly to the owed party. By establishing the terms in advance, there would be fewer surprises and greater transparency in the event we could help in other ways (like repairing something or lending a car).
Don’t Enable Spending You Wouldn’t Allow for Yourself
This rule is a big reason we decided it would be important to clarify the terms. If a family member was looking for money so they can buy a brand new Lexus, the only thing they’d get from us is a nasty case of stinkeye. That’s just not going to happen. Moreover, by saying no, maybe we’d prevent them from making a bad financial decision. But there are plenty of worthwhile situations like expensive medical bills, rent after getting laid off, etc., that we’d gladly help with. Much like giving money to charity, we would want to know that our contribution would go toward a cause we believe in.
We didn’t want this process to turn us into rule-driven robots. After all, we’re talking about our moms, dads, brothers, sisters, and eventually, children. We love all these folks in good times and bad. They might fall on hard times, or be underprepared, or just make plain boneheaded decisions. But no matter the reason, they deserve our love and generosity. That doesn’t mean we’d always give them money, but we’d always give them our attention and offer to help in other ways.
We hope all these rules and criteria won’t dissuade you—or our family members—from sitting next to us at Thanksgiving. But Joanna and I are much more concerned about making sure we never see any empty chairs at the family dinner table over familial money disputes. And we hope that these ground rules will do just that.
Now, please pass the gravy.
Joanna and Johnny are the writing duo behind Our Freaking Budget, a personal finance documenting the joys, pains, and realities of living on a budget. From the basics of saving and getting out of debt, to venturing into the wild world of basic investing, they document their journey through young adulthood while exploring their love-hate relationship with their “freaking budget.”
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