Many of us have been in a tough financial situation ourselves, so seeing someone you love—like a family member—go through this type of struggle can be difficult. Wanting to help someone you love that’s in need is only natural, and sometimes lending to a family member can be very helpful; however, sometimes it can snowball into a far more serious problem. A family’s members financial problems can isolate some members from others, cause fights and even end relationships. So, one can often wonder: how do I know when I should and shouldn’t help? Here are some tips to help you decide when it’s okay to help, and when you should take a step back.
How close is this person to you?
The first thing that you may want to ask yourself is how close you are to the person that is asking for help. You may be more inclined to help an immediate family member such as your child, sibling or parent than you are to help your great uncle Bob or your third cousin twice removed.
Have you or someone else in the family lent money to this person before?
If this person is asking for money a second, third or fourth time, maybe an intervention of some type is needed. This person may never get their finances straight if they are continuously being bailed out by family members. Also, if they have borrowed from another family member, perhaps asking the lender if payments were made on time, and if the funds were paid back in a timely manner would be beneficial.
Why does this person need financial help?
Although this question is not always necessary (and almost always awkward), sometimes knowing a person’s situation can help you make your decision. Having a vehicle break down and having no way to work is completely different than needing money to fuel a shopping trip or vacation.
Can you afford to lend the funds?
This is perhaps the most important point that can be stressed. If loaning the funds is going to leave you in a tough spot, then saying no should be a no-brainer. Your family member should understand that you have to look out for yourself first.
Loaning money to family members can sometimes get messy, but remember: nothing is worth the relationships you have with loved ones. Knowing all the facts will help you make a knowledgeable, informed decision that will be best for everyone in the end.
To see more helpful financial tips, visit us at www.www.albertgelman.com or call us today at 416-504-1650. We offer free financial consultations!