My parents raised me to believe that you should always help others when you can. So, when I see someone I care about who is struggling, I try to support them in any way possible. However, many people will take advantage of your good nature and generosity if you aren’t careful. If you have someone like this in your life, here are 3 ways you can protect yourself and set boundaries with a financially irresponsible person.
3 Boundaries You Can Set With a Financially Irresponsible Person
We all experience financial setbacks and need help once in a while. But if asking for money has become a habit, it’s a sign that they don’t manage money well. Therefore, it’s important to protect yourself by setting boundaries with a financially irresponsible person.
1. Hold them accountable.
If you truly care about someone, you want them to learn from their mistakes and grow as a person. But for this to happen, they have to be held accountable for the choices they make.
Start by having an honest conversation with them about what is going on in their life. If they are asking for help, find out about the circumstances that got them into financial straits. Identifying negative patterns is the first step. However, you can also offer to review their budget and show them how to live within their means.
Should you decide to give them money, there are other ways you can hold them accountable as well.
- Be clear about whether it is a gift or a loan. If it’s a loan, set clear terms and dates for repayment.
- Have them sign a contract stating they understand and agree to all terms.
- Ask for copies of bills and receipts of payment.
- Make arrangements to pay the company or institution directly.
- Offer gift cards instead of cash.
2. Don’t give what you can’t afford.
When I offer help, I do it without any expectations. But, this means you must be sure you can afford the financial loss. Even with the best of intentions, there is a chance you will never get your money back.
In order to protect your financial stability, you need to make yourself a priority and ensure your needs are met first. Don’t put your security in jeopardy by giving what you need for your own expenses.
3. Enforce your financial limits.
If you are on top of your finances, then you already know how much discretionary income you have in the budget. Should you decide to give financial assistance, determine the amount you are willing to contribute from the start.
Establishing this limit and clearly communicating it to the person you are lending to is extremely important. Because if they don’t change their behavior, they will ask again. And then you will need to enforce this boundary. It can be uncomfortable, especially with family members. However, if you give in every time they test it, you aren’t helping anyone. Furthermore, you’re putting your finances at risk.
Learning When and How to Say No
When you are dealing with a financially irresponsible person, you must learn how to say no to protect your family and your future. Otherwise, they may bleed you dry.
These conversations are hard, but necessary. You can remind them of the all your previous support, the terms they agreed to, and why you are no longer willing to offer financial assistance. But at some point, they must learn that their actions and poor choices have negative consequences. By telling them no, you can help them learn to become more self-sufficient, change bad habits, and stop relying on others to clean up their financial messes.
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Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.