The average person gets asked for financial support in many ways. Usually, we get bombarded with GoFundMe requests and Facebook fundraisers or asked to donate to a collection at work for a colleague’s baby shower or wedding.
Although those situations can be mildly challenging to say no to, it’s not too difficult to create a budget line to prepare for them and move on. It can be a struggle when someone we love asks to borrow money or otherwise needs financial support, and we can be caught off guard when a friend or family member asks us for a large sum of money.
Listen to this week’s episode of the rich and regular podcast on financial help, and continue reading below for some ideas on saying no graciously when someone asks you for money.
Say no, kindly.
When someone asks to borrow money, we can feel guilty and maybe even ashamed when we don’t immediately say yes—even if giving them the money would put us in financial hardship.
Saying no doesn’t come naturally to many people, especially if you were always raised to lend a helping hand or offer support to friends and family, no matter the cost. Saying no to someone you love is hard, but below are some things to consider when someone approaches you for money.
Listen to their story.
When someone asks you for money, start by listening and offering empathy. People often need to be heard just as much as they need actual material support.
By giving your friend or family member a safe place to talk about their situation or bounce around potential solutions to their problems, you may help them more than if you just wrote a check.
Communicate clearly and politely.
Saying no right away when someone asks you for help can feel mean and heartless, but it is also the kindest way to let someone down.
Avoiding the situation by saying “maybe” or “let me think about it” leaves the door open for them to ask again and pushes the problem down the road, which can build up resentment on both sides. Saying no with kind directness is better than using soft language that can be misinterpreted.
Stay calm and hold your boundaries.
Some people don’t like to hear no and may try to persuade you by getting louder and more aggressive. It can be tempting to promise to help someone to get them to quiet down, especially if you’re in a public place.
Know that you have the right to leave any situation that makes you feel uncomfortable. If the person asking for money can’t handle a kind no, your relationship may not have been what you thought it was.
Offer help in other ways.
When we can’t offer to support someone with financial assistance, we can provide help in other ways. Listening to someone talk about their problems and helping them develop a plan, researching available resources, and being emotionally supportive are all things we can do to help our friends and family in tough times.
Remember that it can be tempting to co-sign for a loan or become a guarantor on a credit agreement, but if your loved one stops paying, you will be responsible for the whole amount.
Not only could you end up owing thousands of dollars you didn’t expect, but depending on what you co-signed, it could also hurt your credit score, make it harder for you to buy or refinance your own home or car, or even make it hard for you to get a new job, since some companies check your credit report before giving you a job.
We focus so much on saving and financial freedom to live our best lives, including helping people we love. Just be cautious that you don’t become your family’s only safety net. Consider these guidelines before pulling out your checkbook if you decide to give.
Define your terms.
We specifically use the word giving instead of loaning. Unless you are willing to draw up a contract and possibly take someone to court to reclaim the funds, consider making a gift of the money you have decided to give someone. That way, there are no unclear expectations or hurt feelings for missed repayment deadlines.
If you decide to provide a loan instead of a gift, make sure you research ways to protect yourself. Depending on how much money is involved, you might want to use a contract or talk to an attorney to help make a fair deal for you and the other person.
Include giving in your budget.
Knowing how much you can safely give someone without putting yourself in difficult circumstances is essential. Create a line item in your budget titled “Giving” to have ready cash available without cutting back on your own life.
Consider keeping this line item separate from any charitable giving you do so that social causes you care about do not constantly come in second to a family member’s financial requests.
Budgeting a category for giving also tells you how much you can afford to give someone. Once you’ve exhausted your giving budget, you don’t have any other funds to provide without removing money from other line items.
Keep your goals in front of you.
When someone you love needs help, rushing in and offering to save the day can be tempting. This is a good idea, but if it hurts your finances too much, you might want to think again.
Remember that you are saving so you and your family can live your best life, and providing gifts and loans to everyone who comes asking can hurt your financial future.