One of the first places many individuals go for assistance during difficult times is their family and close friends. People often find themselves in financial trouble if they suffer an unexpected loss of employment or are burdened by high medical expenses.
Many well-intentioned family members have found themselves drawn into the financial pit by a loved one’s issues which is something everyone needs to avoid.
People close to you may have financial difficulties at any moment. Knowing the best methods to assist a friend or member of your family who is through financial difficulties may sometimes be challenging especially without damaging your own financial standing.
While being helpful, avoid being enabling. There could be an additional embarrassment, humiliation, and guilt layers associated with this.
It may be challenging to negotiate the relational minefield that money can cause. The following advice supports loved ones who are struggling financially while simultaneously looking out for your best interests.
Give a Financial Gift
According to Aliza Naiman, the marketing manager of Olgam Life: “You may wish to provide an outright monetary present if your loved one is experiencing a short-term cash flow issue.
Determine how much you can afford to contribute without putting your finances in danger, and then either give the whole sum at once (and let your loved one know that’s the situation) or maybe provide smaller contributions on a sporadic or regular basis until the matter is fixed.
To avoid putting the receiver of the present in an unpleasant position, make sure it is known that the money is a gift and not a loan that must be returned.
If you’re thinking of giving them a sizable quantity of money, you’ll want to be aware of the Internal Revenue Service’s yearly gift tax exclusion, which is determined each year (IRS).”
Loan Co-Sign
For short-term financial requirements, your loved one could be interested in acquiring a loan or line of credit (LOC), but what if their credit necessitates having a co-signer?
If a bank, credit union, or cyber lender offered you a loan or line of credit, would you be prepared to co-sign?
There are legal and financial effects to co-signing on a loan, so it’s crucial to understand them before blithely responding “yes” and effectively giving a family member your excellent credit.
The most important thing to realize is that you are legally obligated to pay back the loan even if the other borrower doesn’t.
Even if you and your close relative had an accord that you wouldn’t be required to make payments, the lender may still file a lawsuit against you and demand that you pay the whole amount.
Your personal credit will now also be impacted by this past-due debt.
Therefore, if your sister, brother, or uncle does not pay the loan back in its entirety and on time, the lender may report this to the credit agencies to be included in your credit report, which might damage your credit score.
Loan co-signing is a significant matter. Your family member’s requirement for a co-signer on a loan indicates that the lender believes they pose too significant a risk for the bank to assume on their own.
What assurances do you have that they will return the loan if the bank is unsure? Since you are legally taking on this debt and its payment as well, it can also imply that you would later have greater trouble obtaining a loan for yourself.
Emotional Assistance
The most effective place to begin is by offering emotional support.
Don’t judge; just listen
Money is just one aspect of financial difficulties. Your buddy may be struggling with sadness and anxiety. Spend some time getting to know their circumstance. Even if you believe you know the solution, start by listening.
Simply being ready to listen when they need to speak about their struggles might bring about much-needed comfort
Share Your Own Experiences
Perhaps you’ve had similar monetary problems in the past. Don’t be hesitant to discuss your own experiences and how you overcame them, whether it was having out-of-control credit cards or losing your job.
It might be reassuring for those who are struggling financially to learn that their position is neither unique nor permanent.
By sharing your experience, you might provide others insight into how to handle their own financial difficulties.
Network Assistance
Susan Melony, the CMO of FreePeopleSearch recommends network assistance. She claims:
“It could be difficult for you to assist a buddy with their professional problems or other difficulties, but you might know someone who can. Offer to write an email or publish a covert message on your professional social media network as a starter.
Does your buddy have a convincing reason for needing money, such as the need to pay for their child’s summer camp or cover medical costs? Encourage them to launch a crowdfunding campaign and let your network know about it.”
Aid them in setting up a budget
Offer to assist a friend or member of your family who is just learning how to manage money in creating a budget. They will be able to manage their earnings in subsequent months as a result.
Establish a rule that you’ll only give money to a family member one more time AFTER you sit down to create a budget with them if they keep pestering you for money.
These cash envelope wallets and budget planners are useful for creating budgets and managing money.
Introducing this budgetary guideline will either enrage them or win their support.
Those that concur are truly in need of assistance. People must believe you are competent with money if they come to you for assistance because you have savings. These kinds of family members are appreciative of assistance in controlling their spending.
The individuals that get irate with you or attempt to shame you into giving them money don’t want your assistance; they want freebies.
These are often the same family members that are surrounded by a lot of drama.
The people who respond negatively when you establish limits are those who believe they are not subject to them.
You may choose to break the loop if this seems familiar. It’s time for YOU to alter your behavior and stop supporting THEIR bad financial decisions.
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