Money & Career
What to do when a loved one asks to borrow money
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Money & Career
What to do when a loved one asks to borrow money
When a friend or family member asks for money, there's more than cash at risk; the whole relationship might be in jeopardy. Money expert Gail Vaz-Oxlade says one of the most common questions she gets is how to speak to a loved one in this situation. In fact, that's what inspired her to write her latest book, Money Talks: When to Say Yes and How to Say No (HarperCollins, $23). She says one of the biggest mistakes we make when it comes to finances is not having the tough money conversations we need to have with family members. "If we don't have these conversations, we're going to let the money ruin the relationship," she says. Vaz-Oxlade gave us some of her best tips on how to deal with a loved one asking for money.
1. Decide if it's a good idea to say yes.
"You may have a parent who, by no fault of their own, finds themselves in distress and you have the means to help. Or you might have adult children who are going through difficult circumstances—divorce, job loss, whatever." There are some one-time situations in which it makes sense to help, but if someone's regularly asking for financial help, Vaz-Oxlade warns that there is probably a deeper issue. "There is a behavioural disconnect and you need to figure out what the behavioural disconnect is so that you can help the person change."
2. Set ground rules.
If you decide to lend a loved one money, be clear about your expectations from the outset. Detail how long the arrangement will last, what you expect from the other person and if or when repayment will occur. Some people may want to put this in writing. "Even as you extend a helping hand, you have to have some expectation that the other person is going to offer some reciprocity to you," she says. "Anything that's given without any strings at all is taken for granted. And that ends up turning into frustration."
3. Learn to say no.
"When you say no, you have to mean it. It can't be: 'I'm giving you this $25, but I'm not giving you any more.' That's not no; that's maybe," says Vaz-Oxlade. It's OK to say no, but you need to say it unequivocally. Otherwise, you could help perpetuate the cycle of your friend or family member relying on you for monetary help.
4. Say it with kindness.
When someone clearly has a problem with their spending habits or financial planning, there's nothing wrong with saying no to lending them money, but your response should come from a place of wanting to help. More cash would just be a temporary solution anyways. "Kindness should be your intention," says Vaz-Oxlade. You should never go into this conversation with the aim of belittling someone. "If you go into it with the right intention, they'll still get mad at you. But as long as you know you genuinely want to help, you can keep going over it until you get through to them."
5. Don't let disagreements become rifts.
"When they say something that makes you see red, your answer is to say, 'Sorry, I can't do this right now because you've made me really angry. I'm going for a walk.' Or, 'I'm really sorry you're so upset about this, we need to put this down for the next 24 hours and we'll pick it up again.'" Tensions tend to rise when money is involved, but giving some time and space can help both parties re-evaluate the situation before hurtful things are said.
6. Collaborate to create a solution.
Rather than giving your loved one money, helping him or her create a plan or a budget can offer a longer-term solution. "You can't make someone a budget. They won't buy into it," says Vaz-Oxlade. She explains that you can help someone with budgeting, but it's crucial that he or she is involved in making the tough spending decisions for themselves so that they'll actually be committed to stick with those decisions. Not sure if you have the know-how to help your friend clean up his or her finances? Ask around. Though we often don't like talking to others about money, chances are you know someone who can help. Sometimes it requires sucking up some chagrin to admit we don't know what we're doing, but, says Vaz-Oxlade, it's worth it for the end goal of getting smarter about money.
Need a hand gettin g started? Check out these tools to help you track spending and create a budget.
1. Decide if it's a good idea to say yes.
"You may have a parent who, by no fault of their own, finds themselves in distress and you have the means to help. Or you might have adult children who are going through difficult circumstances—divorce, job loss, whatever." There are some one-time situations in which it makes sense to help, but if someone's regularly asking for financial help, Vaz-Oxlade warns that there is probably a deeper issue. "There is a behavioural disconnect and you need to figure out what the behavioural disconnect is so that you can help the person change."
2. Set ground rules.
If you decide to lend a loved one money, be clear about your expectations from the outset. Detail how long the arrangement will last, what you expect from the other person and if or when repayment will occur. Some people may want to put this in writing. "Even as you extend a helping hand, you have to have some expectation that the other person is going to offer some reciprocity to you," she says. "Anything that's given without any strings at all is taken for granted. And that ends up turning into frustration."
3. Learn to say no.
"When you say no, you have to mean it. It can't be: 'I'm giving you this $25, but I'm not giving you any more.' That's not no; that's maybe," says Vaz-Oxlade. It's OK to say no, but you need to say it unequivocally. Otherwise, you could help perpetuate the cycle of your friend or family member relying on you for monetary help.
4. Say it with kindness.
When someone clearly has a problem with their spending habits or financial planning, there's nothing wrong with saying no to lending them money, but your response should come from a place of wanting to help. More cash would just be a temporary solution anyways. "Kindness should be your intention," says Vaz-Oxlade. You should never go into this conversation with the aim of belittling someone. "If you go into it with the right intention, they'll still get mad at you. But as long as you know you genuinely want to help, you can keep going over it until you get through to them."
5. Don't let disagreements become rifts.
"When they say something that makes you see red, your answer is to say, 'Sorry, I can't do this right now because you've made me really angry. I'm going for a walk.' Or, 'I'm really sorry you're so upset about this, we need to put this down for the next 24 hours and we'll pick it up again.'" Tensions tend to rise when money is involved, but giving some time and space can help both parties re-evaluate the situation before hurtful things are said.
6. Collaborate to create a solution.
Rather than giving your loved one money, helping him or her create a plan or a budget can offer a longer-term solution. "You can't make someone a budget. They won't buy into it," says Vaz-Oxlade. She explains that you can help someone with budgeting, but it's crucial that he or she is involved in making the tough spending decisions for themselves so that they'll actually be committed to stick with those decisions. Not sure if you have the know-how to help your friend clean up his or her finances? Ask around. Though we often don't like talking to others about money, chances are you know someone who can help. Sometimes it requires sucking up some chagrin to admit we don't know what we're doing, but, says Vaz-Oxlade, it's worth it for the end goal of getting smarter about money.
Need a hand gettin g started? Check out these tools to help you track spending and create a budget.
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