Christmas is traditionally a period heavy on family time and on spending. Mixing family and finances can often be a recipe for disaster.
Sometimes money can drive a wedge between family members especially when you have a parent, sibling, child or maybe even a partner who seems determined to sabotage their finances. It can be difficult to know how to help or where to draw the line.
So how can you strengthen your family’s finances and relationships this Christmas? We take a look at five important things to think about when it comes to handling family finances not only over the next month, but throughout the year.
How to support your family towards better financial wellbeing without risking your relationships...
1. Establish where the financial problems are coming from.
Talking to someone in your family about why they’re bad with money can be a confronting experience for both of you. But if you can tackle it without blame or judgement, it can build a more equal and understanding relationship between you.
Showing genuine interest in why someone struggles with financial hardship can go a long way towards resolving the tension and conflict that often comes with talking about money.
When gambling or addiction are involved, getting professional help can allow them to deal with financial troubles as part of a larger problem they need to overcome.
If holding down a job is the challenge, you can support them towards better career choices by talking to them about their strengths, looking at training options and helping with their resume.
Whatever the root of the problem, getting it out in the open can help you understand the best way of offering or finding the support they need.
2. Handle gifts and handouts carefully.
Sometimes you’ll want to act on your goodwill towards family with a cash gift or loan of some kind. In the right circumstances, giving someone a handout can be just what they need to get them out of a negative spiral or just take the pressure off, so they can make a plan and a budget they can stick to.
Alternatively, if you want to help them financially but keep control of how the money is spent - you could offer to pre-pay bills.
If it’s a cash handout, make sure you both understand whether you’re making it a gift or a loan. For a loan - make a written agreement for a realistic repayment schedule you’re both comfortable with.
While it might be a tricky subject to bring up, talk about what will happen if they don’t pay you back. Even if you’ve helped in the past, it doesn’t mean you have an unlimited budget for gifting or lending money to family.
Remember- whatever type of financial help you’re offering, you should be confident you can afford it, whether they pay you back or not.
3. Know when to say NO!
Saying no to a request for money can be tricky. You might be worried that refusing to provide a gift or loan will sour your relationship and create problems for a person you care about.
Most importantly - you need to think of the strain you’ll put on yourself and your relationship if you offer money you simply can’t afford to give. Helping in other ways can be a good way to let a family member know you care and want the best for them.
Lending tools, appliances or a vehicle can save them on the cost of buying them. Helping with childcare or housework may be just what they need to make more time for earning money. There are lots of ways to help without actually digging into your own pocket.
4. Foster healthy budgeting and other good money habits.
If you’ve got good money-management skills, take the time to share them. Being a budget mentor is one of the best and easiest ways to help a family member who is struggling to make ends meet.
Sit down with all their bank and credit card statements, bills and pay slips. Take a good look at how much money is coming in and where it’s going. Talk about what they value and how to prioritise that in their spending and save on other things.
Introduce them to some budgeting apps to make it easier for them to track their spending. There are a host of apps available to help get budgeting under control. Our top five apps to get you off to a great start for 2019 include TrackMySPEND, TrackMyGOALS, Pocketbook, Goodbudget, and Mint. Check out our blog next month for a rundown on the best apps.
Sometimes people need a little nudge to hunt down a bargain rather than take the first price they’re offered. Just by introducing your family member to comparison tools for things like energy bills and insurance you can begin an important change in their approach to spending.
5. Know when to call in the experts!
You might be a budgeting maestro, but sometimes it takes an expert to get family finances on track. There are all sorts of ways that financial advice can make a difference to you and your family finances.
They can help you determine if a gift or loan is affordable in the context of your other financial goals, like saving for retirement or getting debt free. Having someone step in and provide your family member with impartial advice when they’re in a financial mess can be just what you all need to make sure they’re getting support without putting pressure on your relationship and your own finances.
Whatever your family or financial situation may be, a FINANCIAL PLANNER can offer valuable advice on budgeting, dealing with debt and planning for a better financial future. Contact MBC on 6362 0988 to arrange an obligation free appointment.