One of the hardest things to navigate in personal finance is the relationships we have with others. Friends and family in particular can be the cause of anguish when it comes to money matters. A few weeks ago Twitter was set on fire by a discussion about a person who asked a friend to help them with $50 for school fees which the friend said they couldn’t help with only to tell them a few days later that they had made a purchase worth $35000. The discussion was divisive as some said the friend could surely afford to help while others felt there was entitlement in expecting help from others. Regardless of which side of the debate you fall on there are some tips we can use for dealing with Family, friends and finances.
I would be remiss to go into this discussion without touching on black tax. Black Tax is a reality for many young adults in Africa and we cannot hide from it. We’ve discussed black tax before so there’s no need to rehash old wounds here. The tips included here are not a commentary or solutions for matters on Black tax as the considerations are very different. This is about helping out friends and family through lending or when no is a perfectly valid answer. With that out of the way let’s look at those tips for family, friends and finance.
Only if you mean it
When it comes to lending money or helping out the first thing we need to grasp is that we should only be saying yes if we mean yes. There are many valid reasons why you may not be willing to part with your money and you are well within your rights to decline if that is the case. Agreeing to lend someone money or help them out when you are unwilling usually leads to the worst kind of regret, foreseeable regret.
Out of abundance
It does help when you use money that you can afford to give away. Whether it’s a loan and you simply do not have a better use for the money immediately or you do not see yourself needing the money at all you should learn to give out of abundance and not out of guilt or fear of rejection. If you feel coerced to help out then that is the number one sign that you really shouldn’t be helping out. If there is an immediate need for the money then it’s never a good idea to help someone who, sometimes by no fault of their own, couldn’t take care of their own immediate needs.
Make a firm agreement
If you are going to lend to a friend or family member then you must have a clear agreement of the loan and better to have it in writing. While a verbal agreement is a legally valid agreement it is very difficult to prove what was said when things go South. So having any loan agreement in writing is essential. If they are not willing to put down the agreement in clear written terms with you then they are not likely going to have the energy to pay you back.
Don’t expect reciprocation
Many people struggle with the fact that helping people out of their problems doesn’t mean that they are going to be there to help you out when you have problems. Many people help people out with the hope that when they are in need they will receive the same support. Only to find that they are driving down a one-way street. Know that helping someone out doesn’t entitle or guarantee their help when you need it.
Be careful of enabling
This is something you need to think about if the need for help is recurring. For example, someone who needs transport money in the middle of every month is better off being a line item in your budget. Assuming this person is gainfully employed you will have to start asking yourself why they need help every month. The answer might simply be that you are enabling their bad financial management.
Learn to say no
Sometimes you just cannot help and that is alright. We need to accept that we cannot always swoop to the rescue. Helping others when it lands you in trouble is not helping at all – one of my favourite lessons from The Richest Man in Babylon. Learn to say no when the answer is no.
Hopefully, I have not discouraged you from helping out people. We have all needed help at some point financially from friends or family and so someone needing help should not be a strange thing. We simply need to make sure when we are helping that it is the right thing to do for everyone involved.