A recent exchange with a Team Debt Free member raised an interesting point. Is giving money the best way to help family and/or friends in need? Here’s my perfectly noncommittal take again – it depends. I will say, an automatic response to help with funds (even when you have them) is not ever the best approach. Many have family and/or friends in need of assistance. Some more than others. Heck, we’ve probably been that person in need at some point. However, helping with cash should be evaluated carefully based on each situation.
If you are a giver, especially one who has received a helping hand in the past, you may lean towards swooping in with financial relief at the first sign of discomfort. The closer the relationship, the more sensitive your giving trigger finger may be.
Consider these points before finalizing your next gift transaction:
1. Are you in a financial position to help? Can you give cash or are you considering “helping” with credit cards? Co-signing? Some other long or short term financial entanglement? I always say, let your cash be your guide. If you don’t have it to give, you could be throwing fuel on the fire.
2. Are you really helping? Enabling someone to side step the consequences of poor decision making only prolongs the inevitable. You might actually be setting your loved one up for an even larger disaster. We course correct when forced to. In our zeal to help, we could be helping someone improve their irresponsibility. Consider sharing alternatives, information, or a sympathetic ear to listen.
3. Are you scared to say no? Having to say “no” can be humbling. It could be an admission that you’re not in a great financial position. Have you enjoyed a reputation as the problem solver? One who has it all together? It can also feel as though you are disappointing a loved one. Saying “no” may be as hard to say as it is to hear. This relates to question #1. We have to be in a financial position to help when helping with cash is most effective.
4. Are you and a spouse on the same page? Do you want to give and your spouse does not? Be very careful not to let the crisis in someone else’s household disrupt yours. There should be no movement until there is agreement.
5. Are you seizing the moment? Per my conversation today, no one wants to hear fiscal best practices in the midst of a crisis. However, this might actually be the best time to share what you’ve learned. Not with finger wagging peppered with I-told-you-so’s, but with compassion and respect. You can make a cash gift contingent upon seeing some concrete actions (i.e. meeting with a financial counselor, reading a great personal finance book, or attending a money management workshop or seminar).
Bottom line, helping with cash should be the best option. If you’re haven’t evaluated each request on a case by case basis, you may not really be helping. The ability to help loved ones in need is yet another reason to become debt free.
Do you agree or disagree? I’d love to hear your feedback.