Money Woes In the Family: How to Respond

In these difficult times many families are experiencing money shortages.  It’s safe to say that folk are in great need as the effects of the recession continue.  What I wish to focus on today is how to help family members who come to you for assistance. Where do you draw the line and decide how much is enough? What are reasonable expectations about repayment of family loans?

Do What You Say You Will Do.  It’s important for you to do only what you say you will do.  If you decide they can stay at your house 1 month, stand by it.  If you decide a $500 loan is enough, stand by it.  Family relationships are the most troublesome when it comes to money.  The help itself is not the issue, it’s establishing strong parameters aroung the type of help given.  It’s important that you give them a hand up, not a hand out.

Put it in writing.  If you’re expecting return of payment on your loan, it makes sense to put it in writing.  While this need not be a formal legal document, it’s important to make the particulars of repayment clear.

Be Willing To Gift It Away.  I’ve heard it said to not make loans to family.  You need to consider this strongly when looking at the long-term situation.  You won’t see your friends at Thanksgiving every year, but you will see your brother Sam.  Some things are not worth fighting over.  If you only get half of what you agreed on, it might be best to tell them it’s a gift (maybe Christmas came early).

Give them Information.  Information is power.  Maybe your family member lacks information.  Do they know what a budget is? Do they have one?  Is he/she aware of resources in the community that can help?  Resources such as free credit counseling (www.nfcc.org), low cost housing, temporary job placement, and public transportation are available in most communities today.  Oftentimes these resources are just a phone call away.

Bartering.  Maybe your family member has some skills that you lack.  A week’s stay at your house in exchange for a repaired pipe might be a good trade off. 

Listen to your spouse.  You need to let your spouse know of your family member’s request for help.  Your spouse may offer other options that can benefit the situation.  Your spouse may be better informed on just what kind of help your family is able to offer at the time.  It’s better your spouse be involved on the front end rather thnn them find out later.

The decision to help a family member with financial problems is a big one. It’s important that you do what you can and keep the security of your own financial needs as well.  What about you? What ideas above make the most sense to you when you consider helping your family with money?

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