One of the trickiest pathways in personal finance to navigate involves family, something that we all have in one form or another. Maybe you haven’t talked to your family in years. Or maybe you and your family are as close as close can be. No matter what, the truth is that you need to think very carefully about whether or not you’re willing to let family borrow money from you. Some family members will take advantage of this, not even bothering to pay you back. This is part of the process. They will test to see what they can get away with, since you’re their relative. However, it’s important to stand up for yourself. If they’re in a bad situation, there’s no need to judge or shame them. Explain to them that setting up structure isn’t designed to be cruel to them. You want to make sure that you’re doing only what’s fair and reasonable for their lives.
Trying to set boundaries can be hard. They may fight you tooth and nail, or just tell you to trust them. But people get away with much when they’re your family, and it’s very important to have your wits about you at all times.
Now then, where do you really begin with family? You start talking to them about what they need, when they need it, and whether or not it’s in your ability to do so. If they need way, a hundred pounds, and you’re good for it — you may as well loan it to them. If you don’t have any attachment to the money, that is. It may take a lot longer than you think to get the money back.
Putting things into writing is often the best thing to do, but it’s not something that people are really hungry to do. It can make them feel even worse, because they feel like you’re being too cold and transactional. But this protects them as well. You aren’t going to be able to go back and demand interest if you didn’t charge them interest in the first place. Nor are you going to be able to automatically seize their property. You just need to make sure that you are being as honest as possible every step of the way.
You never know — maybe one day, they’ll actually need to borrow money from you. That’s something that you shouldn’t overall at all. They might need to lean on you. If that’s okay with you, then you need to definitely push forward and let everything come into its own design, in its own time. We can’t tell you which way to go, because we don’t know your financial situation.
One thing that I would point out, however, is that you need to make sure that you’re on stable ground. Some people ignore this, and end up giving family money that’s necessary for bills and savings. If your financial goals for the month are met, then loan away. But if you have a weak savings account, you really have no business loaning anyone any money at all. Don’t tell yourself that you can just put things on credit cards. That’s a good way to have a financial disaster of your very own. You have to be smart about things. Is taking out of your family’s resources really the best move? NOT AT ALL.
A stable family is a very happy family. It’s hard to see family suffer, but make sure that they’ve looked into every single resource possible. You never know what type of government scheme is out there to help them. It might be hard for their pride to accept government assistance, but it gets them out of a tough and very terrible situation.