Have you ever found yourself in the position where you were asked to help a family member out financially? Did their financial crisis happen at a “good” time for you?
In the aftermath of “The Great Recession” I am hearing more and more stories about adult kids helping their parents, parents helping their kids, cousins helping cousins, and the list goes on. In the past family always helped family. Then, for a long period of time we forgot that when times were hard we called on our family to help us out.
I grew up living that reality. My parents divorced when I was young and I was sent to my Grandmother’s house (Dad’s mom) by my mom for 6 months so that she could sort things out. You have to understand…those two weren’t necessarily friends.
My mom let her little sister, my aunt stay with us for a year when I was younger. My mom’s aunts and uncles would routinely stay with her and her parents. save money, then buy homes.
Currently people have been caught by the financial sh$tstorm that was the Great Recession. None of us were prepared for what happened. Even though WE SHOULD HAVE BEEN. As the country gets back on track and things start to get better we have an opportunity to prepare and create a plan not only for our own financial emergencies, we can also prepare and set in place how we will respond when a family member asks for help.
You don’t want to be in the position of being asked for help and being unable to offer it. Or, even worse, you don’t want to be in the position where you jeopardize your personal finances trying to help out your relative (or a friend). So, I have some suggestions on how to craft a “Family/Friend emergency response plan.”
- Almost like Fight Club-No one should talk about the Fight Club.* From the movie. You should NOT tell your relatives what your emergency preparedness plan is for when you find them asking you for help.
Because, when you think about it. We are everyday in the financial fight of our lives. Until we have: no debt, paid off house, and passive income-you are at risk. This doesn’t mean you can’t help family and friends out. It just means you have to be very deliberate in the process.
Preparing For Your Friend Or Family Member’s Financial Emergency
- You should always prepare for your personal emergencies first! If you don’t have a full pantry, plenty of hygiene products, and an emergency savings-get on it. Especially while you are working and things are stable. This is obviously the time to focus on your own emergency plan. If you haven’t done this then you aren’t in the position to help anyone else.
- Give out of your pantry-This is common in my family. My relatives have been known to give food out of their deep freezers, gardens, and pantries to other relatives who need a helping hand.
- Give Grocery Store Gift Cards-I have started purchasing food gift cards (that don’t expire) not only for myself, but for whomever might ask me for help. By giving a grocery store gift card I know that the money will be spent on what I hope it will be spent on-food. I think that people get too judgmental about how people (the recipients) spend money given to them during an emergency. This eliminates that issue. The money is going exactly where you would like it to go.
- Only give what you can afford not to get back!! This one is huge. If you are giving more than what you can afford to give then it changes the energy of the exchange. You are then hoping to get the money back. Clearly, if people have asked you for financial help they probably won’t be in the position to return the money that you gave them. Just be realistic about that and you won’t be angry later.
- Have a separate dedicated account for family/friend emergencies–This is a great way to continue practicing the art of saving money. If for some reason you end up in an emergency this is clearly another emergency option that you can tap into.
- Pay whatever it is that needs to be paid-directly-However, don’t set it up electronically. If your family member/friend is having difficulties with rent/mortgage get the mailing information and pay it directly with a cashier’s check. You do have to be careful about having you name show up accidentally on other people’s bills. YOU DON’T WANT THAT! The person that you’re helping might not love that but if they want your help you have the right to set some stipulations on how that help manifests itself.
- Don’t Be Judgmental–Part of the reason I quit Dave Ramsey was that I felt that he was so angry at people..for making mistakes. We’re human. We make mistakes. I have made more mistakes than I can count. Most people are feeling pretty crappy when they get to the point when they have to ask for money from you. Be aware of that.
- The Serial Requester-There are some people who have figured out that you have your stuff together. If you find yourself in the situation where you’re always helping this person out- then you have to decide when you’re going to cut the purse strings. You will have to say “No” and not feel guilty about it. It will be hard. But, you shouldn’t be used because you’ve prepared for emergencies. When you say “No” mean it. You can’t go back on your word. Sometimes you have to let people fall on their face even though it’s hard to watch.
I know that there are some people out there who will argue that they aren’t responsible for their family members’ problems and that’s true. However, I’m sure that most families function like mine. Sometimes you’re asked to help someone out-and you do. I just want you to think ahead because sooner or later you might find yourself in the position of helping someone. Be prepared.