Here's How to Gently but Firmly Set Financial Boundaries with Loved Ones
Families, and our relationships with them, tend to be complicated. We do not always get along, nor do we always agree on important things such as finances. Sometimes, we want to help family members with their finances, which is a generous act, but it's important to also set financial boundaries. It depends on the situation, the family dynamics, and where we are in our own stage of life. "Knowing (and standing by) your financial boundaries helps to preserve your relationship with those you love, and keep it on solid footing," explains Dr. Julie Gurner, executive coach, psychologist, and host of the podcast "The Relentless." "Money changing hands has the potential to change relationships, if you don't know where the lines are."
While you feel obligated to give away this money because "it's family," it can put a large strain on their personal finances and long-term goals. Here's how to strike the right balance with proper etiquette.
Before you set boundaries, it's important to know what they are for you, says Dr. Gurner. Do this before challenges arise in which a family member may ask for money. "Navigating financial boundaries can be a complex area where emotions can run high, and knowing what your rules are in advance makes it far easier to stand by them and have clarity when the time comes," she says. Some of the rules could be rigid, such as not helping a child with a car payment or cell phone bill once they are 18 years old, while others can be more flexible, like assisting in a family member's unexpected medical bills but not paying on their credit card debt.
"While the general advice is not to loan any amount of money to friends or family unless you can afford to lose it (and do not expect it to be repaid), that general wisdom is often not the best rule," says Dr. Gurner. "Expect that any pattern you set, is a pattern that others might anticipate will be repeated." This means that if you do help out a family member with their finances, they may expect more help in the future and so may others in the family. So, make sure to establish clearly defined rules about money with your loved ones.
"While no one can tell you exactly what boundaries you should set with your loved ones, a good rule of thumb is to set boundaries that will prevent you from feeling [as if you are being] taken advantage of," she adds. This could mean agreeing to a repayment plan on the loan, drafting a checklist of questions to ask about the loan, or even signing a contract. "Whether it's enabling others' bad behaviors or supporting someone when they lack personal responsibility—feeling [as if you are being] used brings a host of negative emotions that can spoil any previous relationship you once had."
Communication Is Key
It can be nerve-wracking to set these boundaries with family members. Will it affect the relationship? "Realize going in that you will always risk a negative response or pushback when setting a boundary, particularly when others have something to gain if the boundary didn't exist," says Dr. Gurner. "When others attempt to push a boundary that you've set for yourself, communicate directly and clearly. For example, if a loved one wanted to borrow money to purchase sports tickets, you might acknowledge that you know that they love sports but aren't going to lend them money to buy the tickets. You can offer to watch it with them at home or simply let it go."
Being able to say "no" can go a long way in helping your relationships with others. As difficult as it is, sometimes we do need to say "no" and it is important to know your boundaries ahead of time, communicate them to others, and stand by them.