It was a lovely dinner — until your nephew cornered you while everyone else was getting in their cars. He wanted to know if you could see your way clear to lend him another couple of grand, just until his business took off. This would be the last time he asked for money — for real this time.
Whether you got out your checkbook or you told your nephew that you’re done bankrolling his schemes, this kind of financial encounter is enough to raise your blood pressure and get that vein in your forehead popping. Trying to navigate this kind of request while maintaining the relationship is not only uncomfortable, but it can also cause you a great deal of financial stress. You may feel as though you have to choose between your own financial comfort and your relationship with your family member.
Here’s the good news: It may not be easy, but you can protect yourself, your relationships, and your assets when a family member has unreasonable financial expectations — whether those family members are inveterate money requesters, nosy ones who feel comfortable prying into your financial life, or big spenders who want you to keep up with them.
Family Money Issues
Here are five of the most common sticky family money issues you might encounter, and ways you can deflect the problem and protect yourself.
1. Requests for Money
Every family has a member who is constantly asking for “a little help” to get through a tough time. This kind of request has an added layer of emotional complication when it’s your adult child asking for money and you feel responsible for her. Your emotional response to such a request can run the gamut from shame at not being able to help, to resentment that you were even asked — and it may seem that whatever decision you make will be costly to you, either financially or emotionally.
Saying No to Requests for Money
Saying no to a request for money can be a perfectly reasonable and financially responsible response. You are taking care of yourself financially by refusing the request, and you are also letting your family member handle the consequences of her own actions. Also, it’s important always to remember that your money is your own to do with as you see fit. You do not “owe” it to anyone.
If you choose to say no, don’t tell your family member that you can’t afford it, even if that is the case. This adds unnecessary stress to the relationship, since your would-be borrower might then feel she can question every purchase you make if you can’t afford to help her out. Your finances are not her business, so don’t invite her in by mentioning them.
The trick is to clearly and honestly state your financial boundary, by saying either, “I’m not comfortable giving or lending money,” or “I have specific plans for my money and can’t help you that way.”
To make sure your relative knows you care, you can follow up your refusal by asking if there is anything non-financial you can do to help.
Saying Yes to Requests for Money
What if you do have the financial ability to help? First, remember that you should never lend money that you truly can’t afford to lose. It’s better to assume that you might not be repaid than to raid your retirement account to pay for your adult son’s new car after a wreck. You also need to be prepared for the loan to alter your relationship, even if you are perfectly capable of handling the hit to your bank account.
That’s why you should treat a loan the same way the bank would — by requiring a written contract with the repayment terms spelled out, including what will happen in case your borrower misses a payment. You can find free promissory note forms online, and it’s a good idea to get the documents witnessed and notarized. That will make it clear to your borrower that you truly expect to be repaid and that you are treating this as a business transaction. These kinds of clear parameters actually make it easier for you to maintain an easy relationship with your relative because the expectations are clearly stated from the beginning.
If your family member is upset that you want promissory paperwork, remember that his reaction to your financial requirements is his problem, not yours. He made the request, so you get to set the parameters of the loan.
2. Prying Into Your Finances
There are any number of ways an unwelcome relative could pry into your financial life. You may have in-laws who ask not-so-subtle questions about the contents of your will, or you may have a nosy sibling who unabashedly looks through your papers when she thinks she can get away with it.
But your finances are your business and, unless you are discussing important financial matters with a family member who will be directly affected, you do not have to share a single piece of information with anyone.
Deflecting Nosy Questions and Prying Eyes
It’s very likely that you will be shocked if someone asks you a greedy question about your will or if you find someone rifling through your papers. That shock can work in your favor, because a horrified response of “I beg your pardon?!” might be enough to embarrass the nosy one into stopping what she’s doing.
Beyond that, let your prying relatives know that your personal financial information is shared on a need-to-know basis. This may also be a good time to use the Southern phrase, “Bless your heart.” Telling your family member, “Bless your heart for worrying about me!” makes it crystal clear that she should keep her nose out of your business, yet you can sound both sweet and polite while saying it.
3. Pressure to Spend Money
Family members often want you to continue doing things as you have always done them, including keeping up your former spending habits. You might have toned down your spending once you decided to kick your retirement savings into high gear or after a change in your financial circumstances, but your family expects you to keep rolling along at the old level.
This gets sticky if you feel like you need to continue to pay for gifts or vacations or dinners out because that’s how you show love to your family. Alternatively, you might feel embarrassed at the change in your circumstances, so the pressure from family members to keep spending is difficult for you to ignore.
“No one can make you feel inferior without your consent”--Eleanor Roosevelt
Easing the Pressure
While having family members pressure you to spend money is certainly inappropriate on their end, you still have all the power in this situation. Their pressure is meaningless if you don’t allow it to bother you.
Of course, that is easier said than done. So it’s smart to think through why pressure from family members can cause you to spend money you don’t have. Do you want to show your love or avoid the sense of shame that your circumstances have changed, or keep inhabiting the role of Lord/Lady Bountiful? Once you have pinpointed the emotion and dealt with the feeling, you’ll be less susceptible to the pressure your family might put on you. And once you have made a habit of shrugging off their pressure, they’ll use it less and less often.
4. Expecting You to Foot the Bill for Extravagances
Parents of adult children may often find that their expectations for education, weddings, and other major life events are decidedly different from their kids’ expectations. When your son is planning his wedding and seems to think you’ll pay for a bash that would put Gatsby to shame or your daughter is collecting expensive advanced degrees on your dime with no paying job in sight, it can be very difficult to burst the bubble of their expectations. You do want them to be happy, after all.
Giving the Gift of Limits
It might feel painful to challenge your child’s expectations about what and how much you will pay for, but it will be much better for them in the long run than just saying yes. For one thing, your child will not thank you if you pay for his lavish wedding only to then set up residence in his basement after you retire because you didn’t save money for yourself. It is a gift to both you and your child to be financially independent as a retiree.
In addition, letting your child know that there are limits to your financial gifts gives them the chance to achieve their own financial independence, which they can feel proud of.
5. Inheritance Conflict
There is something about the promise of an inheritance that can bring out the worst in people. You might find that a sibling seems more invested in protecting her inheritance than taking care of your parents in their waning years. Or you may be worried that your remarried elderly father may be changing the will in favor of his new spouse instead of his children. These kinds of situations can get ugly and tear otherwise close-knit families apart.
Having Open Conversations
The best way to head off the ugliness of inheritance conflict is to prepare for a variety of end-of-life decision-making. It’s important to have conversations with your parents (and with your own children) about preferences for elder care and financial preparation. The time to make sure money is set aside specifically for your parents’ (or your own) care is before it is needed, so you do not have to fight with your brother over the issue when it arises. Consult with an estate attorney to make sure your parents’ wishes will be legally taken care of.
It’s also important to let go of any expectations you may have regarding an inheritance. Your parents’ money is theirs, which means your widowed mother has every right to leave all the money to her 27-year-old second husband or her favorite cat charity. It is better to come to terms with that possibility before you are also dealing with the grief of losing a parent. You can avoid a great deal of the ugliness of inheritance greed if you focus on the far more important emotional inheritance you have received from your parents.
The key? Learning to handle sticky situations. Money can ruin even the closest relationships, but it doesn’t have to.
by Emily Guy Birken
Reprinted from The Hartford