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Should You Give Money To Family?

helping parents financiallyI am a big believer in not supporting adult children to the point of discouraging their independence and ability to provide for themselves. I think it’s fine to help your children, but not put yourself  or them in a bad financial place because of it. However, looking at the other end of the spectrum, when is it an adult child’s responsibility to help their parents or family financially? I think with any money decision, it’s good to make a list of pros and cons. I’m not sure where I stand on the issue of whether or not to give money to family.

Reasons To Give Money To Parents or Family

You’re Grateful

Maybe your family spent all their money helping you get established by paying for college or helping with expenses while you were starting out. Maybe they never made much money but supported you in other ways that helped you become successful. I think helping family in a time of need or with regular expenses they can’t afford would be a nice way to return the favor.

You Can Afford It

If you’ve lived within your means, have adequate savings, and don’t have debt,  helping family financially might be a good thing to include in your budget.

Reasons Not To Give Money To Your Family

It Might Be Taken for Granted

Children can become dependent on the bank of Mom and Dad, but family can also become dependent on the bank of you. We’ve been watching Damages on Netflix, and Tate Donovan plays Tom, a high profile attorney. Tom pays the mortgage and expenses for his parents and in-laws. As a result, they don’t try to save or earn any money themselves.

You Might Fall on Hard Times

Tom ends up losing most of his investments in a Ponzi scheme, then he quits his job. His family is devastated that he can’t bankroll them anymore, and he ends up in a very bad way while trying to get his money back. I know it’s a show, but I bet people really do crazy things in the name of not disappointing family who expect material things.

Your Family Is Terrible With Money

If your family has never made any effort to save more or spend less and always trys to keep up with the Joneses, you could be enabling by giving them money.

Can You Give Money To Family With Strings Attached?

Maybe you want to help out family, but are fearful of what they might spend the money on. If your family is in a bad financial way but still smokes, drinks, gambles, or has HBO while you are watching every nickel, you might end up feeling resentful if you give away your hard earned money. What if you put a condition on how they spend the money or give them an ultimatum about quitting costly habits before you’ll help?

I personally don’t think that’s a good idea. Adults are adults and, good or bad, they tend to do what they want. If you nag all the time, I don’t think it does anything other than make you sound self righteous. I think if you want to give your family money and can afford it, then go ahead. If they blow it, at least you had good intentions. If you can’t stand to see them continue down the same path, then don’t give them anything. Life is too short and money is too hard to earn to spend it on things that will cause regret.

What Can I Give Besides Money?

I think in most situations, giving money to financially irresponsible people is like giving to the alcoholic holding the sign on the corner. It might provide some immediate gratification, but really won’t matter over the long term. Instead of giving money, it might be more helpful to give something like a gift card for groceries or offering to pay a bill directly to the company. That way, you know that the money wasn’t wasted.

I would also never, ever offer to do something like cosign a loan or give an actual loan to family members. Unless you’re prepared to cover the payments or not get paid back, you could end up disappointed. I know I’ve mentioned it before, but my former boss had his credit score ruined and missed out on a good rate for refinancing his house because of a loan he cosigned. His son quit paying and didn’t bother to tell him. He had no idea until he tried to get approved for the refinance. If you do cosign, at least make sure you see a copy of the statement each month or have access to on online account so you can step in if your co-signee fails.

In reality, helping family financially is something we’ve been considering. Without going into specifics, I think we’ve decided not do it unless they need immediate help with something that involves health or safety. Maybe that’s selfish, but there are too many variables in play to make it seem like a good idea at the moment. I guess we can always change our minds later on.

Do you struggle with the issue of helping family financially?  Is giving money to family a crazy idea?

Image: Freedigitalphotos.net/Miles

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

43 comments

  1. I am sure that I am going to be put in this situation within the next 10 years. My inlaws are pretty much broke and they are terrible with money. I want to help them, but they don’t want to help themselves.

    Unfortunately I don’t have the answer to this question. Ask me again in a decade and i’ll let you know how it pans out from my end.

  2. We’ve had to deal with this some in our family. We have given both money and things other than money like gift cards for groceries and such. It has been a few years, but we have come down to preferring to go the gift card route if the need is there as we can have more of a control over what it’s spent on and it helps meet any practical needs. That said, it’s such a tough question to answer especially when it’s close family that’s involved that I think you generally need to take it on a case by case basis.
    John @ Wise Dollar recently posted..What is the Difference Between Term Life and Whole Life Insurance?My Profile

    • It’s hard to say yes or no in the family crisis situation. I do like the idea of giving grocery gift cards or similar. I guess you could buy cigarettes or lottery tickets with a gift card, but you’d hope that wouldn’t happen.

  3. Ugh, we have a few family members that are continually in money troubles – big money troubles. None of them see it, though, or will admit it, so we just let them fall. It doesn’t feel right to enable them in any way. We have, however, offered to share our budgeting tips and value based spending info with them, but they’re not interested.
    Laurie @thefrugalfarmer recently posted..How to Save Money by Planning AheadMy Profile

    • Ha! Sadly, not many people are interested in budgeting and saving. I guess there is no fun in that. I also think you kind of have to realize financially responsibility on your own. The whole lead the horse to water saying really is true.

  4. I love when someone tackles this subject! I think the only way you should give money to family is in one-off situations and with no strings attached. If you are continually giving money to someone, you are not really helping them with their issues and you are probably creating more. It is hard to watch anyone suffer; however, we all need to be held accountable for our decisions and sometimes hitting rock bottom is the only wake up call that will work for someone. I have a client who continually gives her parents money but the problem is that it is putting my client into financial stress trying to support her parents. We are now trying to work through a solution for both, but because it is family, there is so much emotion and history that it will be difficult for both sides to work it out.
    Shannon @ Financially Blonde recently posted..Music Mondays – We Are OneMy Profile

    • I guess you should certainly let them know it’s a one time thing and not a repeat payment. So many people feel obligated, and I get that, but I would never want my family to have to bail me out because of bad choices.

  5. Giving or lending money to family can be tricky…we’ve done it a couple of times, and it’s always worked out. I can’t say that’s true for all instances in the family. The biggest problem is, once you do it once, it’s like you open the floodgates and it happens more and more often…..

  6. Nearly every person I know who has “loaned” money to their family had a bad outcome to report. Most never get the money back and many end up with ruined relationships because of it. Against our better judgment we helped my brother in law when he had an uninsured auto accident. We did get the money back over a period of time but it was completely unexpected. We thought at the time that it would probably end up being a gift instead of a loan. Other members of the family gave the same brother money and they ended up getting stiffed so we really got lucky.

    • That’s really hard when someone made a bad choice, like being uninsured, and can’t take care of the consequences. You feel bad for them, but it was their bad choice that got them into the situation. Being proactive before the fact certainly has it merits.

  7. Very difficult question because there is so much emotion involved but I would agree with you and say no. Giving useful gives like groceries or paying bills would be the best route, but even then that could be taken for granted or expected all the time as opposed to one-off situations. I have one sister on low income subsidy and my Mum always gave her $200/mth which my Dad has continued and will likely be expected to continue once my Dad passes away. What is really difficult is that probably most of the money goes to cigarettes for her husband! Ya. She doesn’t spend money on herself. Really sad situation there and I don’t blog about that much at all because it’s too painful.
    debt debs recently posted..Top Ten Reasons You Need to Manage Your FinancesMy Profile

    • This post was much more personal when I first wrote it but I decided that wasn’t information I should share. I do feel that lots of people who think they need money have many expenses or habits that should be cut first. It’s hard to make people change, though.

  8. I totally agree with everything you said on this one. My brother is one of those people I’d never give money to because he takes if for granted and would spend it on crap. I actually have so many thoughts on the subject, but it would turn into a long winded post by the time I really spoke my mind on the subject. In most cases, I don’t think money and family mix very well.
    Tonya@Budget and the Beach recently posted..So Many Goals, So Little TimeMy Profile

  9. I don’t think giving money is the big issue, unless they have problems wisely using money. The real issue is loaning money to family. It doesn’t seem like that ends very well. When you are under obligation to pay someone back, it fundamentally changes the relationship. It’s no longer just a family relationship…it’s a borrower/lender or master/servant relationship as well. I’d just assume stay away from that with family (and friends as well). If a member of my family needs money and I’m in a position and feel led to help, I’m just giving them the money…no strings attached.
    Brian @ Luke1428 recently posted..How I Increased My Facebook Reach For Blog Posts By Over 700 PercentMy Profile

  10. I think if you recognize that it may harm – sometimes permanently – the relationship you have with the family member in question, it’s not a bad thing to lend or give money to family. There is always the risk of people becoming dependent on you giving them money and/or take advantage of it, though. In general I’d avoid it unless a family member was in dire circumstances.

    • Giving money could certainly be opening a can of worms that no one wants to deal with. I’d say think long and hard about the good and bad of the situation.

  11. If you’re giving money to family as a way of showing your appreciation of them, then that is a great thing. I don’t think that loaning money to anyone in your family or even your close friends is a good idea. Money has a way of coming between people. So unless you’re giving out of the goodness of your heart and not expecting anything in return, then giving money to others can be highly rewarding.
    Cash Cow Couple recently posted..The Dollar Tree is AwesomeMy Profile

    • That’s certainly the right attitude. Giving a gift is much different than a loan. The whole perspective changes and it lessens the chances of hard feelings.

  12. This one is always a toughie because there is so much emotion attached. When people you love and care about are hurting, it can be hard not to help, especially if you are in a position to do so. My rule of thumb is to only give/loan money that you can afford never getting back. And if not having money repaid (even if you can afford the loss) is going to anger you to the point where the relationship is destroyed, don’t give money. It doesn’t mean you can’t help, but not with cold, hard cash. Do as you mentioned, pay a bill directly or give them a gift certificate to a grocery store. I am very careful about loaning money because I have been burnt. In retrospect, I should have known better because looking at the situation from the outside now – it’s not a surprise.
    Shannon @ The Heavy Purse recently posted..4 Smart Financial Moves to Make this SummerMy Profile

  13. My mum lends me money when I need cash to invest but I always pay back and with interest. I would not give money to my kids if they were a financial wreck. I would invite them to move back home and feed them, period, so they rush back on their feet and start earning money.
    Pauline recently posted..How Jon is Reaching Financial IndependenceMy Profile

    • That’s a good point. Offering food, shelter, or other basic needs might be better than a blank check. That’s great that you and your Mum have been able to be investment partners. A win/win!

  14. We’ve helped family before, and it ended terribly. Then, we have also helped other family members and it has ended well. I think each situation is different.
    Michelle recently posted..Sales Tactics You May Be Falling ForMy Profile

    • I think as long as you go into in not expecting to get the money back that would help. I’ve never really given money so I can’t say how I’d feel.

  15. It is almost always a VERY bad idea to give/lend people in your family money unless it is little kids for allowance (too young to work a job).

    If you read the Millionaire Next Door, it reaffirms this. It sounds cold, but usually if people are having money trouble lending them will not solve the root cause. It will only delay the “pain” and in many cases can make it even worse when TSHTF.
    Derek at MoneyAhoy recently posted..Make Money on Craigslist with FlippingMy Profile

  16. It’s hard to say because each situation is different. If they are bad with money and got themselves into financial trouble because of it then we should think twice about giving them money, but if they are decent with their finances but are in a bind and need some help then it might be okay to help them out.
    Aldo recently posted..DIY Phone Screen ReplacementMy Profile

    • I don’t think some people ever really are good with money, but that doesn’t make me feel the need to help any less.

  17. Funny, I had this exact problem recently. My life was in danger and my family refused to help me. I managed, with the help of friends to get out alive, but now I have no family, as far as I am concerned. Be careful that you know all the facts before you say no.
    Brad @ How to Save Money recently posted..Create a Grocery List to Save MoneyMy Profile

    • If life was in danger, I’d have no problem helping however I could. To help buy a car or something like that, I’m not sure. I don’t want it to be an awkward thing down the road either.

  18. Oh wow, I really miss Damages. Such a great show and I forgot about that story line with Tate Donovan. I’ll have to rewatch the series one of these days. Anyway, I would avoid lending money to family and friends. If I get asked and I can afford it I will give a small amount and that would be it. I don’t want to be someone’s bank because of their bad choices plus who needs the drama that can come from it.
    Raquel@Practical Cents recently posted..Tips to Avoid Spending TemptationsMy Profile

  19. I have loaned money to family before, but there were contracts on the money, just like a loan. We had to get paid on this day every month until it was paid off. There were late charges and the like. It worked out well, but we treated it like a business transaction, not a simple family loan.
    Grayson Bell recently posted..I’m Back! Updates and Changes ComingMy Profile

    • I don’t think our family would go for signing a contract and we’d have no way to enforce it. It would have to be more like a gift. I think your way would be better, but would not go well at all.

  20. Funny….we have a guy on our podcast tomorrow who is in favor of helping family (if they’re using the money to start a business)….but through a website where they can help make it mutually beneficial. It was interesting to see a business based on something that many people think of as the wrong thing to do.
    Joe Saul-Sehy recently posted..Should You Self-Invite Your +1 To The Wedding? – STK 081My Profile

  21. I’d say that each situation is definitely different. I think that, in general, giving money to family is a terrible idea. Now, if I won the Powerball, I’d give my family some money as a gift. On the other hand, I would be very very cautious about ever giving a loan to family members.
    Greg | Travel Blue Book recently posted..On the Hunt for the Forrest Fenn TreasureMy Profile

  22. I would be more than happy to loan/give money to any of my family members. Fortunately, everyone in my immediate family has their act together. I can’t imagine a situation where I would need to help any of them.
    Holly@ClubThrifty recently posted..Why Do People Choose to Be Car Poor?My Profile

  23. I hear a few stories of family and friends struggling with money, and I ask myself why don’t they reach out to ask about money advice? (They know I have a money blog) Because they are not ready to change is the end result. They don’t want someone telling them how to cut back here or there for the peacefulness that being good with finances brings. One coworker talks all the time how she wants to be free of debt, and guess what she financed a 2014 car 2 months ago. I see a bad money trend in her future.
    EL @ Moneywatch101 recently posted..New level of success, What’s Next?My Profile

  24. I fall under the “I’m grateful” camp. My parents might not have made very much, but they did always support me, and I knew they were there for me (and still are). They gave me so much, and I try do what I can for them, whether it involves money or not. My parents are pretty stubborn and don’t like to accept money, but I enjoy treating them on special occasions and spoiling them on holidays. I think it depends on your relationship with your family, though. In my case, I know they’re responsible and I can trust them to do the right thing.
    E.M. recently posted..Do You Learn Lessons the Hard Way?My Profile

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