Setting Financial Boundaries with Loved Ones

A roommate begs you to cover their rent while they wait for their next paycheck. A family member asks you to build their website for free. A friend invites you to an expensive destination wedding. Saying no can be hard, but your financial resources are limited. How do you decide when to help, and what to say to loved ones who keep asking for cash? The answer involves setting strong boundaries.

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This activity will help you:

• Decide how to prioritize requests for financial help
• Say no in a firm yet respectful way
• Feel comfortable maintaining boundaries around money

1. Consider your core values.

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Determine when and why you feel most comfortable offering financial help, then create guidelines that help you apply these preferences consistently. Let your core values – the personal beliefs that matter most to you – shape these guidelines by asking yourself questions like these:

• Should I provide the most help to the people who need it most, or should I aim to give a little help to nearly anyone who asks?
• What should I do if the reason for the financial request conflicts with my values? What should I do if it’s an unwise investment – for example, loaning money to a business that seems unlikely to succeed?
• How should I handle situations where the same person asks for money again and again? At what point should I say no?

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By establishing your guidelines ahead of time, you make it easier to say yes or no when someone asks you for money. Even if you’re worried that a “no” might upset them, you can remind yourself that you’re making this choice because of your beliefs, not your guilt, fear or anxiety.

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2. Remember you’re not responsible for others’ financial choices.

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Some financial challenges stem from circumstances outside our control. Others involve decision-making. When a loved one asks for money because they haven’t used it well in the past, how do you want to respond? If you think it’s important to lend a hand, you may want to come to an agreement about how the money should be spent or help the person requesting the money gain financial literacy to aid their future choices. If the request seems out of line, you might just decline it. 

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No matter what, keep in mind that you’re not obligated to rescue your loved ones from poor decisions. In some cases, saying no may help them develop better financial habits. This may be far more valuable than cash in the long run.

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3. Make sure you’re meeting your own financial needs.

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Even if helping others is your heart’s desire, don’t sacrifice your own stability. There’s no shame in admitting that your bank account isn’t big enough for you to work without pay, give out loans or take a pricey trip right now.

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When a loved one asks you to spend or loan money on their behalf, consider your own financial goals and needs, including your ability to pay your bills, save for college and retirement, and maintain habits that sustain your mind, body and spirit. If you aren’t meeting your own needs, you may end up needing help yourself.

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4. Communicate with clarity, compassion and confidence.

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Once you’ve mapped out your financial boundaries – that is, your limits and expectations surrounding money – communicate them when loved ones ask for financial help. Make it clear how you can and cannot help. If necessary, explain the “why” behind your choice. In many cases, this is a good time to show compassion. Can you remember a time when it was hard to make ends meet? Can you express that you care about this person in another way? Is there a different type of support you might offer, such as helping them problem-solve?

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Finally, be prepared to stand your ground if the other person challenges your financial boundaries. Even if you don’t feel confident when they push back, do your best to remain calm and focused on your core values. You’ve chosen what makes the most sense for you. Chances are, you’ve done it with their best interests at heart – and your own.