Family Money Mangement – Helping Friends And Family In Financial Trouble
When it comes to family money management and assisting friends and family who fall victim to the current economic crisis, most people want to help, but often have absolutely no idea what to do. 90 percent of us understand that the equation of “family + money” = “a particularly nasty” outcome. Hence, the dilemma resulting from being put in this awkward position, not knowing what to do, nor where to turn, can be a bit daunting.
Family Money Management, The First Step
Not to worry – I’ll talk you through it. Firstly, you need to confront the situation in a very sensitive way. Let’s say that your best friend is currently between jobs, and they have no income being generated whatsoever. Unfortunately, this person still has a mortgage, with a repayment due in the short term. If you knew this, and decided that you should indeed take action to assist – you need to think long and hard about what you are about to do. You must realize that whenever you lend money, there is the risk that it may not come back to you. Even though the person is your friend or family member – this very fact alone doesn’t mean they are immune from things like bankruptcy.
Having made the decision that you are willing to risk your own money, you need to discuss your choice with the relevant person. In the above example – take your friend out for a coffee, and get straight down to business. Bring up their situation (in a sensitive way), and ask if you can go in to as much detail as possible. Assuming that you have enough money to support this short term financing act – you should be feeling quite comfortable at this stage.
If you are financially literate (and most people lending money are), take the opportunity to give your friend some good advice on how to generate more income, hopefully to get their feet back on the ground. Friends and family appreciate this, and it can go a long way to helping things.
More times than not, the friend or relative will try to refuse the money. Yes, this is a natural reaction to being offered this type of support. If you truly believe that the money is needed, and can be repaid in time, push ahead with your decision. You should have considered that in the first step above.
Once you have transferred the money to the persons account, ensure that you follow up on a regular basis. Avoid calling to see when you will be repaid – because this puts everyone in a sticky situation. Instead, ask indirect questions such as: “how’s everything coming along?”. “how are the finances going?”, “are you keeping up with those mortgage payments?”, “did you action any of that advice I gave you previously?”. This should stimulate the topic, and will probably get you the answer you were looking for.
One thing is for certain, regardless of what you choose to do. You need to tread with caution. The very fact that they are one of your closest companions should never be compromised by something as material as money. Think about this, and then decide whether lending a financial hand is indeed the right thing to do.
This was a guest post by Andrew Wang who lives in Seattle area. He writes about Travel Reward Credit Card & Student Loans. If you enjoyed this article, make sure you head over and subscribe to his blogs!
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