Friends, Family, and Personal Finance
Personal Finance is usually a touchy subject around friends and family that can easily cause rifts in these relationships. While all individual relationships are different in their own ways, there are a couple general rules you can use to guide you in avoiding personal finance related problems.
1 – Don’t overshare
2- Loans to friends & family are gifts
3 – Don’t push trying to fix friends and family
Whether the topic of personal finance comes up naturally or you have recently hit a goal you are proud of and want to share, it is important not to overshare. There are no real benefits in sharing the specifics of your finances, and for a lot of people it is simply something to judge on. If you are behind, you will be judged for not being super successful. If you are super successful, you will have to deal with envy and jealousy and even sometimes be expected to provide more than your fair share for group things. Of course every relationship is different and only you can gauge how much to share, but if you are ever unsure, always under-share.
Another downside to having people know of your success is that it is much more likely you will be asked for loans by friends and/or family. If you are asked for a loan by a friend or family member, the prudent personal finance advice would be to say just don’t do it. But relationships are complicated and it not always just about the financial aspect. That being said, consider any loans you do give as a gift. If you get repaid great, but expect the money to be gone forever. Why do loans like this? It forces you to evaluate who you will give money to on a different basis. Under the guise of a loan, even someone who is nothing more than an acquaintance could convince with the lure of paying back with interest. Since you know the person, your mind will convince you it isn’t risky either. This is far from the truth! People burn bridges this way all the time. If it is considered a gift though, your mind will go directly to: “is this person important enough to me to give away this money and not expect to get it back?” You will only give money to your closest friends and family. “But I can just only give loans to my closest friends and family and still not consider them a gift.” Sure! When you don’t treat it as a gift though, you run the risk of ruining that friendship if that person does not end up repaying you due to your set expectations. A friend/family member worth loaning money to is not worth losing over them not re-paying that money. Some other notes about this strategy and loaning money to friends/family in general: If you want to be repaid, don’t tell them you consider it as a gift. This is just the expectation you set in your head. If you loan money, even once, the chances of being asked (by them or other people) for money again goes up significantly. Be prepared for this. Most importantly, remember it is always perfectly okay to say no. If you are worried that the relationship of the person asking for the loan might be tarnished by rejecting the request, the person asking you for the loan is a bad friend/family member and doesn’t deserve the help anyways. Sometimes it is more valuable to provide financial advice and insight to help than a loan can. This brings me to my next point:
Often, when friends and family ask you for money or complain about being broke, it is easy to see financial habits that put them in this position. You can try to help, but do not be pushy with personal finance advice. If your first attempts of giving advice are not met with enthusiasm, don’t push the issue. It is the equivalent of trying to tell a smoker to quit smoking over and over. They know it is bad for them, they just don’t really care that much. Pushing the issue will only put an unnecessary strain on the relationship.
Using these 3 guidelines, you should be able to avoid a majority relationship conflicts due to personal finance and save yourself a lot of headache.