Families can be comprised of people with very different personalities, values and financial habits. There may be high earners, low earners and no earners – and even those who are currently financially comfortable can hit hard times and need help. Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, suggests asking yourself the following questions if you’re considering your ability and willingness to provide financial support to a family member.

 

1.    Is this a want or a need? When it comes to living expenses, there is an important difference between a true need and a perceived need. If you are hesitant to help, consider how critical the request really is. Ensuring that a family member can make their rent payment or buy groceries is critical – but helping them afford a nice spring break or pay off a credit card debt may not be a necessity. If the expense isn’t a basic need, or if you’ve assisted with the same expense in the past, ask yourself if you are enabling irresponsible financial behavior.

 

2.    Is this a loan or a gift? Often family members who ask for financial help expect to be able to pay you back, but unfortunately these good intentions don’t always materialize. Consider whether your family member’s circumstances or past behavior indicate that they’ll actually be able to repay you. Also ask yourself whether you’ll be okay – financially and emotionally – if they don’t. When you come to a conclusion, be sure to clarify with the recipient if the money is a loan or a gift, and decide if you will charge interest on the loan and if you’re willing to continue providing financial support in the future.

 

3.    What are my motivations and expectations? It can be easy to say “yes” to a request for financial help, only to have mixed emotions down the road. Consider your own feelings and ask yourself if you’ll resent your decision – or your family member – in the future. Are you expecting the person to respond in a certain way, such as with appreciation or reciprocity? Are you doing it to feel needed or simply following a parental instinct? If your expectations aren’t met, will you be disappointed? If so, it may be better to say “no” than risk damaging your relationship.

 

4.    Will this affect on my own financial well-being? It’s crucial to take a look at your short- and long-term goals and to ask yourself if you can really afford to help. It’s natural to want to provide support, but don’t let a struggling family member jeopardize your own financial security, especially if you’re approaching retirement. By prioritizing your own financial goals and stability, you may even have the ability to comfortably help family members in the future.

 

Making financial decisions can be difficult – and communicating about finances can be even more challenging when you have a family member in need. Consider working with a financial advisor who can help you set goals, track your progress and include any support you’d like to give to family members into your overall financial plan.

 

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