A wise person once said, “Most stress is caused by three things: family, money, and family with no money.” Family means the world to a lot of us, but when they start asking for money, that’s when things start to get complicated. A recent study found that over a third of respondents said that money was the primary cause of friction in their relationships, and stress in any relationship can be detrimental.
Whether your spouse is bad with money, a family member was hit hard by unexpected financial setbacks or a friend keeps asking you for money to get by (or possibly fund an addiction), there are a few things you should consider when a loved one seeks financial help from you.
How do you turn down family and friends who keep asking for money? It can be a touchy subject. Here’s how to handle this delicate situation and say no.
What to Do If Someone Keeps Asking You for Money
One Time Bailout or Repeat Requester?
If your friend or family member is generally pretty good about saving money regularly but they run into an unexpected crisis – huge medical bill, car totaled by uninsured driver, home disaster, etc. – then helping them out in any way you feasibly can is a viable option because you know they have a proven track record of financial stability.
If someone who racks up a ton of credit card debt gets trapped in high-interest payday loans, and can’t even live paycheck to paycheck without acquiring more debt in between pay periods…this person may not pay you back because they clearly haven’t developed the money savvy skills to control their own spending.
Automatically turning down someone’s plea for financial help is difficult for most people, so examine your options before responding to their request. If a loved one is dealing with a life emergency that they couldn’t have anticipated, you could offer to set up a GoFundMe for them if you don’t personally have the money to help them at the moment.
If someone seems to be broke or “on the brink” all the time (they’ll probably speak with emotionally-charged urgency when hitting you up for money), then you have a few options: set up a system of repayment (e.g., a contract), offer them non-monetary resources (job websites, food stamp application, carpooling opportunities to their job, etc.), or flat-out tell them “no”.
You can also look to lower your monthly car payments with a quick and easy refinance. Save money on your auto loan refinance with Lending Club.
Why Do They Need the Money?
Life is hard, and sometimes a person may genuinely have the worst possible luck befall them. Maybe they just lost their job and medical bills are devouring their savings while their landlord is jacking up rent prices all at the same time.
A lot of people don’t have enough money in savings to weather multiple financial setbacks although encouraging them to start an emergency fund is golden advice. And, they may genuinely need the assistance just to get by this difficult time in their lives.
Although most people will act like they have a really good reason to need money from you when they ask for it, some instances may not be as desperate as they’re made out to be. The fact of the matter is, some people – including your closest loved ones and friends – may simply rely on others to bail them out of bad situations, even if their poor decisions got them there in the first place.
If you know someone struggles with an addiction – whether it’s drugs, alcohol, gambling, or any number of costly addictions – refer them to someone who can help instead of giving them money. Here are a few resources:
- Gambling addiction
- Drug and alcohol abuse
- Shopaholic and compulsive spending help
- Online shopping addictions
If someone is truly desperate for money with no recourse – maxed out credit cards, bad credit and can’t qualify for loans, no savings, etc. – then one option is to help them out with stipulations. Most people immediately balk at the idea of attaching strings to monetary help for family and friends. But, sometimes it’s necessary to protect yourself from getting dragged down into financial despair.
You could offer to co-sign a loan for them. But, this may be too risky if that person hasn’t been too good about paying back debts in the past.
Instead, you could set up a loan contract for family and friends and offer them an interest-free loan as long as they agree to pay back the full (or at least partial) amount within a reasonable timeframe. It’s an uncomfortable option for some folks, but if the only alternative is saying “no” then perhaps this is a better idea for all parties involved.
What About Lending Your Car?
According to a recent survey conducted by Esurance, 36% would feel comfortable lending their car to someone, not on their insurance policy. Young drivers are significantly less likely to trust someone with their car. More people would trust friends (40%) than significant others (28%) with their car.
So, what happens when someone else gets into an accident with your car? Who’s responsible? As it turns out, the whole thing can get pretty messy.
There is confusion surrounding “permissive use” — that is, who’s covered and who’s not when it comes to lending out your car.
Laws vary by state, but here are some situations where lending your car could cost you:
- If your friend borrows your car and gets in a wreck, you’d be responsible for filing a claim and paying the deductible; plus, your rate may increase.
- If your friend borrows your car and causes damages that exceed your car insurance limits, the rest may come out of your pocket.
Depending on your state, your liability limits may drop to the state’s minimum if an unlisted person drives your car and causes an injury or accident. That means you’d have to foot the bill for costs beyond these limits.
Learning to Say “No”
If you’re not in the best financial situation yourself at the moment, then turning down someone else’s request for money is the best way out of a potentially long-term problem. There’s no need to lie to them, just tell them straight up: “I need to pay off my credit cards and student loans” or “I’m trying to save up for a car, I’m sorry” or whatever else pertains to your current situation.
Saying no to family members can be incredibly difficult for some people, especially if that person – such as a parent – helped you out a long time ago.
However, you can’t put your wallet at risk based on some internalized guilt you have for not being able to help them out financially. And, even if you’re not struggling financially but the person repeatedly hits you up for money every couple weeks, you have to nip it in the bud and say no before it becomes a recurring problem. If you never put your foot down, they may start relying on you for a steady stream of cash simply because you never refuse them.
On the one hand, they may not react well when you first turn them down, but the initial discomfort will eventually go away. On the other hand, financially bloodletting you will create much bigger concerns in the future. It might even ruin the relationship if they become dependent on you and you feel taken advantage of and respond by cutting them off, so saying “no” right off the bat is probably preferable to the alternate scenario.
Money is the primary cause of conflict in many relationships, including those with parents, relatives, and friends. The last thing you want to do is burn bridges with someone you care about, but if they constantly hound you for “just a few dollars” or disappear after you lend them a considerable chunk of money, then the relationship might be doomed.
Don’t let money control your relations with your loved ones. By following the advice above, you can help them out without abandoning them or losing your financial stability along the way.
How do you turn down family and friends who keep asking for money? It can be a touchy subject. What do you do?