6 Tips on How (and Whether) to Give Family Members Cash Without Straining Your Personal Relationships
Perhaps one of the most delicate and complicated matters that most people tend to overlook is giving money to family members. If it is definitely true that due to the economy anyone can benefit from a small money gift, the deed can be uncomfortable and can even cause some serious conflicts between relatives and friends, making some people consider if it wouldn’t be better to just head to a bank and apply for a personal loan.
Despite all this though, studies consistently show that almost 50% of people (mainly among the young) are already thinking on providing some sort of financial support to their parents and elders, as well as to their children and siblings. This concern is valid, since not everyone can apply for a personal loan nowadays, and sometimes all some people need is just a small amount in order to be steady.
That considered, here are six tips on how can you give money as gifts or for other reasons without causing a strain on your relationships:
1. Only help if you can afford to:
A few studies performed during the past months found that a lot of people below their 40’s didn’t realize just how much helping their relatives was actually cutting into their own savings for retirement. In fact, being so young, some of the respondents to the study said they didn’t placed much importance on this at the beginning, but that they later realized how negatively affected their own retirement savings were by this.
2. Say no to requests when you can’t help:
While turning someone down when they ask for help can be painful, it is sometimes the best choice you can make, especially considering that you might be tight on funds and that some personal loans (especially among relatives) are never repaid. In this case what you need to do is to consider your finances first and foremost. If, after considering you conclude that you really can’t help your relative, then you have to deny the help in a sympathetic but firm way.
3. You might be expected to return the help you get:
If for some reason you receive some money that can help you avoid getting a personal loan, be aware that you might be expected to return the favor or to give at least something in return. Even if it is true that some people help their relatives just out of pure altruism, sometimes they expect something in return, even if not in equivalent manner. This is the case for example, of children taking care of their parents later in their lives, which in most cases is done out of a sense of reciprocity due to all that parents gave their children during their lives.
4. Always do spell out the terms of any gift or loans:
If you happen to give or receive a gift of money and want to avoid future problems with the people that gave it to you, then always discuss the details of the gift or loan in advance. For example, if it is money that is destined for a car, specify if it has to be any specific kind of car. If it is a loan that has to be returned, then discuss if there will be an interest rate and how long can you take to repay it.
5. Money is not always necessary:
Sometimes looking for non-monetary alternatives can be of great help. For example, let’s say your relative lost their car or need to get a new one and you can’t help them with the necessary funds to do so. Instead, you could lend them your own car when you don’t need it. This way you might not be solving their problem entirely, but would be providing some valuable all the same.
6. Put everything in writing:
Especially if you deal give or receive money to/from someone and a repayment is expected, everything should be put into writing. Two of the most important details that should be considered are the interest rate and the repayment schedule for example.