How to respond when your family asks for money
Note:This is one of the hardest things I’ve written about. I’ve personally gone through it and know how it can tear apart a family. In my case it was because I decided to help.
“Joe, you look awful.”
“Wow, is that a good way to greet a friend?” Joe asked me. “But now that you mentioned it, I haven’t been sleeping well.”
Joe then proceeded to tell me about his family situation and the stress it was causing. His brother wasn’t able to pay the rent-again-and came Joe for a loan.
“I’m getting tired of always having to bail him out. I love him, but loaning him another grand won’t solve his problem. And I’m getting tired of everyone assuming that because I run my own business I have money to loan them.” After a bitter chuckle, Joe added “I don’t know why I call it a loan. They never pay me back.”
It wasn’t the first time
Joe and I have been friends for years-heck, he gave me my start in sales! I was familiar with this drama in his family and saw it repeat several times a year. If it wasn’t his brother it was his cousin or uncle. One time their car was in the shop. Another time they were a bit short until payday.
It was like his family thought that because he was an entrepreneur he was their personal bank machine.
The straw that broke the camel’s back
This time things were different. The economic downturn was hitting Joe’s industry hard. He was struggling to keep the doors open, and the last thing he needed was this. In fact, the reason Joe and I were meeting was that I was advising him on his company’s sales and marketing.
Bottom line: he had nothing more to give.
Loaning money to your family is a lose-lose situation
When it comes to family, money, and loans you can’t win. You are a bad mother/son/brother (fill in the appropriate relationship) if you say no. It will poison your relationship even if you say yes. No matter what you do it can tear a family apart.
For entrepreneurs it can be even worse. People assume that just because you own the company that you are rich and that they are entitled. You can easily become their personal bank…or their welfare system.
With this in mind I’ve developed the following guidelines to help deal with the situation. Some sound cold and heartless, but that couldn’t be further from the truth. This is a decision that can have serious consequences. The decision must be based on facts and on what is best for everyone involved. Remember, the best answer is sometimes the one that hurts the most. People often tell me that the best thing that happened to them was that someone told them no. It forced them to grow up and solve the problem themselves.
7 Guidelines when family asks for money
1. Your not the bad guy…
You know the drill. The guilt is being applied. “Just this once…” “Don’t you love me?” You can afford it.” “Blood is thicker than water.” To make it worse other family members are calling you and asking why you won’t help.
You have done nothing wrong. They put you in a bad position, one that you often can’t win.
2. Step back and take a deep breath
The only thing that makes this so hard is that you are dealing with family. With anyone else it would be much easier. When family members ask you for money they don’t use logic. They push your buttons. This sets the stage for a major family crisis.
Now is not the time to make a decision based on feelings. You need to step away and get some space. If they push tell them you need time to think about it. If they keep pushing start asking them questions. This will put the responsibility back on their shoulders. Remember this is their problem. They are coming to you for a favor.
3. Separate emotion from fact
Now I know I’m going to get an earful about this. “It’s your mother. You owe her.” “How can you be so heartless?” “Don’t you love your family?” “Why do you hate your sister?”
Let me put that to rest right now. Decisions based on guilt rarely work out. Don’t be afraid to use decision making tools (I personally love a weighted pro/con list). Feelings and relationships are a factor, but the decision needs to stand on it’s own without the emotions to prop it up.
4. Am I helping or enabling?
This is tough because of the guilt involved. One thing to keep in mind is that often you are only making things worse by handing out money. People need to take responsibility for their own problems. In extreme cases they need to hit bottom before they can start to get better. In these cases the only way to help them is to stand firm.
Now I’m not saying you should always say no. You just need to make a clear headed logical decision that is in everyone’s best interests.
5. What are they doing to solve the problem?
Just bailing someone out won’t solve the problem. Are their expenses exceeding their income? Then they need to take steps to fix the problem. Do they have a gambling problem? Then they need to get help for the underlying addiction.
They need to take responsibility and be willing to fix their own problem. Otherwise this will come up again and again. Each time it will be a little worse.
6. You have the right to say no
Just because it is family doesn’t mean you are obligated to give them money. I hear the argument all the time that you should “honor you parents.” That doesn’t mean you are indebted to them for eternity. Yes you should respect and thank them for bringing you into this world. Just remember that this is a two way street. You deserve the same respect and appreciation as well.
Now most people have parents that gave them love and nurtured them. That is a different story. Then again, most people with loving parents aren’t put in this position.
You have to make the right decision for everyone involved. This needs to be based on facts, not some emotional tug at the heartstrings. If the right answer is no say no.
7. Always a gift never a loan
If you decide giving is the right decision make it a gift. You should never loan money to family. I don’t care if you get the terms in writing, you will never be able to enforce the contract. What are you going to do? Take them to court? I don’t care if they tell you they won’t take charity.
A loan will only poison the relationship. Each time you have to call to collect on the missed payment it will damage both of you. Even if you don’t have to make the call (unlikely) it will always get in the way of your family.
Note: a gift means no future expectations. You don’t have the right to ask for it back. They don’t owe you. You can’t use it for emotional leverage. It must be given freely.
55 Responses to “How to respond when your family asks for money”
Bree
Thank you so much for this post! My mum & brother squandered mum\’s rather large inheritance from my dad passing, are now both enormously in debt & my mum is coming to me to pay her mortgage which is double the cost of my own mortgage. After 6 months of saying she needs a job she hasnt got one or even looked properly & has not put her house or my brothers on the market to sell. A \"gift\" she gave me for my birthday is now going on paying her mortgage for the next few months but after reading your post I realise I\’m becoming an enabler which I\’ve always despised my parents for being with my brother!
Thanks to your post I now know it\’s ok to say no because she is not doing anything to help herself. Now I just have to try to be strong while watching the fallout.
SNOWHITE
My husband and I turned his sisters down by refusing to help them financially. When they had a lot of money, they spent thme like crazy. They bought eveything they wanted. Even when they had not much, they still buy things they do not have to have such as a swimming pool, their kids go to private schools or dancing class. Why should we have to pay their bills? I did lend them money before, they never gave us the money back which is good since I learned my lesson. They still have the nerves to asking money again or even asked us to cosign a 45,000 dollars loan. LOL. I think they have lost their mind. Yes, we have been working very hard and never buy anything which is luxury for so many years, sure we have 500k cash in the bank, so what? My husband is 60 years old,I am 45, ew have 4 boys from 13 to 6. We have a long way to go and we haven\’t bought a house yet. We will use the money we saved to buy a relatively ok home soon. Smply because we have money, it doesn\’t mean we need to lend my sister in laws money. They need to learn their lessons.
I hate to say that I have to see them on the holidays because my mother in law lives with 1 of his sisters. I did it only because I want to make my husbnad and my mother in law happy, my mother in law has lung cancer and is in stage 3. I buy her anything she wants since I believe she is my husband\’s mother, but his sisters are another story—I am not responsible for them. They try to make me feel guilty by not talking to me on Thanksgiving at their house. Ask if I care. Once my mother in law is gone, we will NOT see them again. That is me.
PFH
This article and subsequent posts have really helped me! My mother has been ‘borrowing’ money from me since I was 12 years old…more than 35 years now! (That’s alot of money).
Thank you for this post and your link to the article regarding honoring your parents. I’ve finally made the decision to STOP! I have truly had enough and, while I’m sure my mother will try to make me suffer, I know that I have the strength to stand my ground! I’m not going to feel guilty about working hard and having nice things…I’ve earned it and it’s not my responsibility to take care of a mother who abused me and made my life hell.
emma
I am a 20 year old hairstylist, who’s parents have fallen on hard times. in the past 2 years i have given them close to 4k. they had stopped asking me for the past 4 months, so i had hoped things were getting better for them. this month my mom asked me for 400 cuz they were behind on the rent, by 3 months. i told them when they rented the house it was out of their budget, but they just brushed me off.
its so hard to say no, and i already never expected to see any of it back. but now i need to start taking care of me. i need a car, and my wisdom teeth removed.
i still feel like i want to help them out, if anything for my little brothers sake, but i need to set ground rules. thank you for your article and everyones posts.
SEE
My feeling is that if you loan relatives, or anyone for that matter, money, never expect to get it back. You will never feel the pressure or disappointment in someone if this is your attitude. I have been pleasantly surprised by some people who have paid me back, but I never expect it.
All three of the children in my husband’s family are currently “lending” their mother about $350 a month. And with that she is just meeting her bills. In addition, she is still giving money to her church to which I personally object. She is 96 and has given and given. Now we are in effect giving this money. She was a very poor mother to my husband pursuing a career and not caring for him properly, blaming him for being a bad child when in fact he was very ill and constantly being hospitalized. As a nurse, she made a decision to smoke throughout her pregnancy giving him a heart defect that nearly killed him as a child and later as an
adult. Even at this stage of her life she is manipulative and expresses no love for him. If it were up to me she would get nothing. At age 62 he remains working in order to help support someone who was mentally abusive to him. She lives in style while he works in the evening in declining health. He knows that he stands no chance of getting her to pay him back and she has given all her valuable things to a preferred daughter instead of selling then for her own upkeep. She has dropped her small burial policy because she says her church will take care of things. Fat chance. I’m quite sure we will be paying that as well. I love my husband and worry about him. And I have absolutely no guilt about my feelings toward his mother.