Supporting your Loved Ones Financially

By Kaitlyn Szabo • December 19, 2019

For many families, winter holidays bring opportunities to celebrate with family. This time of year may also be emotionally draining, especially if the subject of money is brought up and your are expected to begin or continue supporting relatives financially.

If a family member is experiencing a financial crisis and turns to you for help, what should you do? While this is an incredibly complicated ask, let’s break it down into three simple questions to determine if you can help and how you can do so without jeopardizing your well-being or your relationship.

Am I in a good position myself?

Before you offer support for your family, make sure that assisting them will not hurt your ability to manage your finances. You cannot give what you don’t have.

It is not sustainable for you or your loved ones if you are straining yourself to help. Assess your financial situation honestly and avoid spending your personal savings, like your retirement, if at all possible.

How can I help?

Once you feel confident you can help, speak with your relative about what they need from you. Supporting them can be a one-time thing or ongoing.

Firstly, if you want to provide one-time, immediate relief for a loved ones’ crisis, you can:

• Directly pay the service provider of an outstanding bill or expense.
• Give a gift or offer a family loan (be cautious about lending to family). Remember: Never lend money you cannot afford to lose
• Choose one of these eight ways to offer financial help for financial members.

Otherwise, if you want to provide ongoing support,

• Identify how much each month you can afford to dedicate to your loved one.
  • Spend up to that amount, and save any remainder each month for future help.
  • Made a savings plan to set aside your determined amount. 
• Set up a designated savings account for family support.
  • Help a relative save for college by opening and contributing to a 529 plan.
  • Contribute to a health-savings account (HSA) for medical expenses.

Another option is supporting them in non-financial ways. For example,  you can:

• Refer them to community resources to help them manage their finances.
• Be an accountability partner for them and have routine check-ins.
• Give your time. Offer to bring them a meal or babysit.

How can I maintain a healthy relationship?

Regardless of what support you offer, the recipient of your kindness should still treat you with respect. 

• Manage emotions. Be mindful of shame and judgment inherent in money conversations. 
• Respect their privacy. Don’t be nosy or share personal information with other family members.
• Establish clear boundaries. Be honest and firm about what you can and cannot do, and stick to that.

Additionally, The Simple Dollar has several insightful posts on how to help financially irresponsible family members and how to support relatives in need without hindering your own well-being.

Money Management E-Newsletter: November 2019