Do you have a relative or know someone who is bad at managing money? There’s a good chance you are not alone. Almost everyone has that one person in their life who remembers to call when they can’t make ends meet and need some help.
When you care about someone, it’s hard to see them go through financial hardship. It’s even more concerning when you see that their difficulties could easily be avoided if they made better financial decisions.
It gets trickier when you have older family members, like uncles or parents, who made some unwise financial choices. So, if you decide to support a family member in financial hardship, Alpha Car Finance has these tips for you.
Talking about money.
Money is a touchy subject for most people. That’s why it’s important to be sure if your family member has a problem with handling money. Because you are concerned about their financial well-being, you might get too eager and offer unsolicited advice. So, wait for them to feel comfortable enough to discuss their financial woes.
Sometimes, all a family member needs is someone who will listen. Allow them to share where their money goes, how much they spend on certain things, and then try to offer some advice. The more they open up to you, the better your advice will be received.
Be a good example.
Aside from offering advice, you can also be a good role model for your family. When they see you are doing your best to stick to your budget, save money, and pay off your monthly bills, you’ll become more credible, and your relatives and friends are more likely to heed your advice.
Determine the cause of their problem.
Many people get into debt in various ways. They might have a gambling problem, a substance abuse problem, or using their credit cards uncontrollably, among other things. Whatever it is, you can help in sorting out what got them in trouble.
You are in a better position since you can see the big picture. Once you identify the root cause, try to help them resolve it and, hopefully, they can avoid repeating the same mistakes.
Be cautious when lending money.
Sometimes, we may tend to give a loan and hope that these money problems will naturally disappear. However, most of these problems may stem from bad financial choices or lack of money management skills.
Lending money straight away will not solve anything and might only make their problems worse. Instead, help them improve their decision-making and money management skills by sharing how you have personally overcome your own financial challenges.
Put it in writing.
If you do decide to offer money, make sure to set clear guidelines. While it may appear overly formal, it is a good idea to put any agreement or transaction you may have on paper. Is it a loan or a cash gift? Be clear about it and set expectations. If it is a loan, set a deadline and have an agreement when your relative must pay it back.
Set clear boundaries.
Seeing a family member go through financial difficulty is tough, but ultimately, they must learn how to be responsible for their own finances. While there is nothing wrong with extending help, there’s only so much you can do. You also have your obligations to worry about and need to think about securing your own future.
Do you know someone who is financially struggling? What did you do to help them? How did you deal with their situation? We’d love to know. Please share your experiences with us by leaving a comment.