There’s probably someone in your extended family or group of friends who is financially irresponsible. They got themselves into financial trouble by making bad decisions over and over again, like racking up credit card debt and wasting money. You wish you could help but don’t know what to do. If you rescue them, you can make them financially dependent on you or risk your financial security. Interfering with someone’s financial worries can cause long-term damage to a relationship. Getting involved financially with financially irresponsible family members who are suffering financial troubles is a delicate matter.
Recognize the Financially Dependent Relatives in Your Household
Finding those members of the family who are financially irresponsible is the first step in dealing with them. Most of us would rather not take on such a task when a member of our own family is experiencing financial troubles. But if you keep a keen eye out for red flags, you might be able to see signs of fiscal irresponsibility in your loved ones. Potential examples of such warning signs are:
- Using credit cards or taking out loans to acquire items beyond their means
- Making purchases without considering the true cost
- Avoiding debt payments or failing to pay it on time
All of these actions by a loved one need to be dealt with right away to keep the family from getting worse.
Assess Your Capabilities
As a first step, you should evaluate how well you think you’d do taking care of your loved ones. This requires taking into account every aspect, including your current financial status. There is no way around the fact that both you and your partner will be a part of this conversation, whether you are single or married. Keep the channels of communication open so that you may share your concerns and thoughts with one another.
It’s important to plan ahead if you expect your loved ones to require financial help in the future. Get your finances in order ahead of time so that you can handle anything that comes your way. If you have your own family to care for and are saving for retirement, you may be unable to help. Since nobody can see into the future, you’ll need to prepare for various possible outcomes and think about the long-term prospects for both of you.
Have an Open Conversation
It is essential to have an open and honest conversation with financially irresponsible family members whom you have discovered are experiencing financial troubles. This may be a difficult conversation to have, but it’s necessary if you want to help a loved one get their life back on track. Confront a loved one about their drinking or other kinds of addiction and have a sincere conversation with them. Keep your manners and empathy in check when talking to a loved one. This will put them at ease, so they may open up about their financial situation. Focusing on potential answers rather than issues is also essential.
For example, instead of declaring, “You’re spending too much money,” you may say, “What can we do to help you manage your money better?”. Rather than judging and shaming your loved one, this shows that you are there to help.
Provide Monetary Aid?
You may feel obligated to support financially irresponsible family members if they are in need. But if you’re already having money problems, this will be very difficult. Remember that you are acting in the long-term interest of a loved one. The best solution may be to step away and let them learn the hard way.
Offering to co-sign for a loan or credit card is one way to lend a helping hand financially. But, don’t forget that you will be held responsible for your family member’s debt if they don’t pay up. And if the bank doesn’t think they are creditworthy enough without your signature… they probably aren’t… and you are just helping them dig a deeper hole.
You might offer to help a close relative with financial matters like making a budget or opening a savings account. They will be able to better monitor their expenditure and set aside funds for the future as a result of this.
Carry Out Financial Transactions in a Professional Manner
Every important financial transaction, such as the sale of property or the acquisition of a sizeable loan, should be delegated to the management of a trained professional. Contracts must be publicized, with every provision spelled out in precise detail. If you are in a position to loan money to the relative and you feel they are actually willing and able to pay it back then be sure to have a written contract so everyone is clear about the terms and the consequences of failure to pay it back.
Offer Employment
If you don’t want to provide money in the form of a loan or gift, hiring a relative to help out with chores might be a good alternative. They may make enough money from this to cover their bills and still have time to do the things you’ve been putting off. Just as you would with an employee, you should lay out the agreement’s specifics, including the work to be done, the expected completion date, and the remuneration. Make sure to specify your policy for dealing with incomplete or subpar work.
Constricting Possible Actions
When it comes to dealing with family members who are financially irresponsible, the final step is to impose limits. When it comes to your expectations around money, you should always be strong and clear about what you want. You may, for example, place a cap on the total amount that a family member or friend can borrow from you or specify a due date for the payment of bills. You also need to come to terms with the fact that you cannot coerce a loved one into making a change. All you can do is provide a helping hand and encourage the person to make financially responsible choices with the money they have.
In Conclusion
Contrary to popular belief, supporting financially irresponsible family members isn’t always the best option. But, in times of economic hardship or an unexpected emergency, your loved ones may want financial assistance from you. Please consider your financial situation carefully before agreeing to help. Remember that even if money is tight, there are still ways to help your loved ones that are meaningful, efficient, and even creative.
