Are You Tired of Lending Money to Relatives and Being the Family Bank?
Below is a question and answer piece about lending money to relatives and some things to consider when loaning money to family.
By Scott Hannah
Q: I’m one of three kids in our family and I seem to be the one who repeatedly lends money to my siblings, and occasionally to other family members. I am fortunate that I can afford to do so, but my wife and I have our own financial plans and are starting to get frustrated with being the family bank. How can we change this?
A: I can appreciate the struggle you face with wanting to be generous with your family, yet getting frustrated with being used as a financial resource. I would suggest that you and your wife examine your values around lending money to relatives.
Examine Your Values
Ask yourselves if lending money to family truly reflects what you want to do as individuals and as a couple.
Are generosity and the sharing of money among the values that you both hold dear or are you lending money to people you love from guilt or a sense of obligation?
Reframe Your Lending
If generosity is an important value for you and your wife, consider reframing how you view lending money. Shifting your perspective can help you focus on the positive aspects of giving.
Since you value generosity, sharing with others, and have the means to do so, try approaching lending with an open heart and without the expectation of repayment. Embracing a mindset of giving freely can help ease any feelings of frustration or resentment.
Look a Little Deeper
However, if you find yourself lending money out of guilt or obligation, it may be worth taking a closer look at the reasons behind these feelings. Ask yourselves why you feel compelled to give.
Is your relative facing a genuine financial hardship, such as illness or job loss, making their need temporary and repayment likely once they recover?
Or is the money being used to fulfill wants rather than necessities, with little structure or certainty around repayment?
The Bottom Line About Lending Money to Relatives
Seeing loved ones struggle financially is never easy, and offering support during a true crisis is very different from being treated as the family bank and being expected to always loan family money.
If your family repeatedly turns to you for financial help, the most valuable support you can offer may be guiding them toward long-term solutions.
Teaching them effective money management strategies can have lasting benefits, creating a financial foundation that extends far beyond any immediate assistance you provide today.
If your family member needs help creating and following a budget, tips and coaching to help them make better financial decisions, or is swamped with debt, you can also encourage them to speak with a local non-profit credit counsellor – such as one of ours. They can receive one-on-one help and guidance and they can also attend free online workshops to learn how to manage their finances better.
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