A decade ago, Stacy Haynes’ mother was struggling to make ends meet. Haynes decided to intervene after her mother, who was in her 50s at the time, became depressed and stressed about her financial situation.
“She would ask me for money to pay her bills,” says Haynes, a counseling psychologist, in an email. With the help of her sister, Haynes encouraged her mom to cut back on spending and create a budget. “She understood,” says Haynes, who lives in Turnersville, New Jersey. “There were times when she was stubborn and refused to make changes or would want to hold on to certain items in her budget … We really wanted her to slow down her spending and take a look at where her money was going.”
Addressing your concerns with a family member who’s bad at money management can be scary. You want your loved one to get his or her financial situation under control, but you don’t want to destroy your relationship in the process. So, it’s important to strike the right tone. “Don’t give judgment,” says Liz Deziel, senior vice president and Twin Cities head of banking for the Private Client Reserve at U.S. Bank. “Try to withhold any sense of judgment that they might perceive from you.”
Here’s how to successfully intervene when it comes to family members who struggle with their finances.
Don’t ignore it. It can be tempting to turn a blind eye toward a family member’s inadequate money management skills. But if you’re tempted to check out altogether, remember that a relative’s money struggles could affect your own bank account. “Family finances are often interconnected among family members, even informally,” says Marcy Keckler, vice president of financial advice strategy for Ameriprise Financial, a financial services company.
Even if a family member’s poor money skills won’t affect your pocketbook, sometimes a money conversation is necessary because you care about your loved one’s well-being and happiness. That’s reason enough to get involved, too, experts say.
Consider your desired outcome. Depending on your relative’s financial woes, the severity of his or her problems and your relationship with that person, you might want different results from your intervention.
Do you want to position yourself as someone your relative can go to for advice? Do you want to loan him some cash? Or should you help her learn to budget and save? Settle on a desired outcome and come up with a plan from there, experts say.
If you’re simply concerned about a family member’s financial know-how, “your ideal outcome is that they come to you whenever they have a decision to make or whenever they are in a predicament,” Deziel says.
If your finances are entangled, you may want to take a more proactive approach. “The quicker you can address it, the easier it’ll be to tackle,” Deziel says.
Sometimes, you may simply want to bail out a family member with a short-term loan or a gift. In that case, make sure you’re on the same page when it comes to repayment. “Think about how you will feel if you aren’t repaid and what effect that will have on the relationship,” Keckler says.
Sit down with a referee. If you can’t find common ground with your family member, engage the help of an outsider. Consider sitting down together with a financial planner, experts say. “Having a third party who can facilitate a difficult conversation about a family’s finances is always a good option,” Deziel says.
The advisor can provide a voice of reason when emotions get high and a dispassionate opinion when things get heated. You can even use a previous meeting with a financial pro as an excuse to start a money conversation with a family member. “The financial professional can be a catalyst or a reason to introduce a topic to your family,” Keckler says.
For example, Keckler notes, you can say, “I was talking to my financial adviser, and I realized that we hadn’t talked about a lot of the questions she was asking me.” Then use that introduction to bring up money worries or questions with your family member.
Let it be. Bottom line: You cannot reform a bad money manager who doesn’t want help. You can talk and talk, and nag and nag, to no avail. At a certain point, you may need to decide whether your relationship or your loved one’s financial health is more important to your life. “Try to be helpful to them in any way they’re open [to],” Deziel says. “But at the end of the day, it’s their choice.”
For Haynes, who helped her mom get started on the right track, extending compassion was key. “Try to offer to help. Don’t just tell them they are doing it wrong,” she says. “Family members already feel bad. Help them to feel hope.”