The Importance of Setting Financial Boundaries with Family and Friends
- Setting financial boundaries is a form of self-care for you and your money.
- Money has the power to change your relationship with your loved ones for better or worse.
- You will need to assess your financial situation first to determine if you are in the position to help others financially. You can't feed someone else from an empty plate.
- You should never loan out money that you cannot afford to give away.
Financial boundaries are important to establish to ensure you maintain a healthy and happy relationship between you, your loved ones, and your money. You may be that person who wants to help your family and friends out financially when they are in a bind. However, it is crucial to note that helping someone else should never put you in a financial hole or cause a strain on your relationship with the person you let borrow money.
Setting your financial boundaries can be tricky. However, if you don’t set limits now, money can have the power to alter your relationships for better or worse.
Here are five tips to help you establish financial limits.
1. Be realistic about your and others’ finances.
Assess your financial situation. Are you in a position to help someone else financially right now? For example, can you afford to lend (or give away) money that may not be returned to you? If you can’t afford to be without the money, you have to be realistic about your finances and say "no" when someone asks you to borrow money.
It is also important to assess the other person’s financial situation. Depending on the person, you may want to help them financially during an economic emergency. On the other end, you may already know their intention with the money they ask you to borrow. If you know they will spend the money on frivolous items, this could leave you in a perpetual cycle of giving money away.
2. Boundaries Are a Form of Self-Care
Boundaries are healthy for every relationship because it helps you separate your feelings from your responsibility and priorities. In addition, your personal restrictions will let other people know what you will and won’t accept.
If you are used to being the person that always steps up to the plate to help your family and friends financially, you may have felt one of the following five emotions:
- Burned Out
- Lack of Identity
If you have felt one of these five emotions, then it’s time to make some serious changes in your life. Although you want to be there for your loved ones, it is okay to say “no.”. You have financial responsibilities too, and you have to think about your financial health. Allowing yourself to have boundaries is a form of self-care. Similar to the oxygen mask airplane analogy, you have to help yourself first. If you don’t put yourself first, you can’t properly help anyone else.
Recommended Read: How You Can Practice Self-Care Without Spending All Your Time or Money
3. Communicate With Others
One of the most important skills you can have in life is effective communication skills. Communicating with others, especially those important to you, can help them understand your needs. Although discussing feelings can be scary at first, it can also be challenging for others to figure out what’s bothering you. Bottling in your emotions leads to stress and anxiety, and you are bound to explode, which wouldn’t be good for your physical, mental, or emotional health.
If you aren’t used to expressing your feelings, keep these tips in mind whenever you want to open an honest conversation with your loved ones:
- Honesty is always the best policy
- Listen to understand the other person
- Be kind to others while you express yourself
- Work toward a solution
After you open the door of communication, it can also help you have a deeper relationship with your family and friends. Through effective communication, you can build a lasting relationship and a strong foundation.
4. Help in Other Non-Financial Ways
When you have friends and family who ask you for money, it can be easy to give them the money rather than ask what they plan to spend it on. You may or may not care to know the answer, but there are several other ways you can support your loved ones that don't involve financial assistance.
For example, your friend may ask you to loan her $100 to help pay off her credit card bill. If you have the time and energy, you can best help them by sitting down with them to create a spending plan that fits their lifestyle. Spending plans, also known as budgets, can help people keep track of their income and expenses. This is a beneficial way to be of service to your friend because you can help them understand any surplus or deficits in their budget, allowing them to account for any unexpected expenses.
Learning how to establish your financial boundaries isn’t always easy. Of course, you want to be there for your loved ones, but you shouldn’t feel guilty for putting your needs first. Prioritizing your financial needs will help you and your loved ones in the long run and ultimately set them up for financial success. For example, if you can continue to pay for your life insurance policy monthly, it will reduce your family's chances of going into debt paying for your funeral expenses. In addition, taking care of your financial health and responsibilities now will reduce the chances of your family having to take on your financial burden later on in life.
Are you learning to establish money boundaries with your loved ones? If so, what are your best tips to help others? Share your thoughts with us in the comment section below.