How To Help Family Members With Money Problems

When you love someone is is hard to see them suffer.  This is especially true when you know their financial woes could easily be avoided by a little financial knowledge and a some wise choices.

But, how do you force someone to gain financial knowledge?  How to you help someone to make wiser choices?  How do you minister to family members who keep making bad money choices?

A guide for helping family members with money problems

1. Remind yourself of your own imperfections

We all have strengths and weaknesses.  You might be financially fit while someone else is physically fit.  You might sit at home scheming ways to talk to them about their finances and they might sit at home thinking of creative ways to approach you about your weight problem.

We are motivated to deal with things that we think are important.  Others often will not think something is important just because we think it is important.

Since none of us a perfect and have a completely balanced life we should interact with our family with a certain degree of love, sympathy, and patience.  Change does not happen over night.

2. Evaluate your relationship with the family member

Here’s a good rule of thumb.  The younger you are in relationship to the person with the money problem the less direct you should be.

For example, if your parents have money problems they confronting them face to face is likely not going to be the best approach.  In the case of parents you should deal with them indirectly or serve as an intermediary to help them.

How do you help parents indirectly?  Share “I” and “we” stories.  Tell you parents, “We just paid off our last debt and it feels great!”  Say, “We are actually saving money for kids’ college so we feel a sense of accomplishment.”  You can even put a financial book on the coffee table when they come over to visit.  We’re not talking about being manipulative here, but simply about creating opportunities to where your parents can invite you to talk to them about finances.

Ho do you serve as an intermediary to help family members with money problems?  In this case you would approach someone that family member trusts and ask them for their help.  Seek out a church member who that family member respects.  Find a co-worker that the family member trusts.  Talk to an older relative who has a good relationship with the family member.

When people don’t respect someone they often will not listen to what they have to say.

3. Don’t try to help money problems just by giving money

Most money problems do not come from a lack of money.  If that was the case money could solve the problem.  Instead, most money problems come from an inability to handle money and make wise money choices.  Until money management issues are addressed no amount of money will help.  Remember, money does not solve money problems.

Therefore, when giving money be sure to also attach requirements that actually help the person improve their financial situation.  Require them to read The Total Money Makeover.  Ask them to do some work in exchange for the money.  Do something to help solve their money management problems not just their money problem.

4. When it comes to lending to family proceed with caution

When you lend money to someone your relationship with them automatically changes.  You must have guidelines when lending to friends and family.

I have not lent money to physical family members, but I have lent money to spiritual brothers and sisters.  I can testify that when someone has defaulted on a payment to you Christian love is harder to extend.  Even when a person is repaying the loan on time the dynamics change.  Every time they see you at church they want to explain something about the loan – “I’ll be sure to get you your next payment on Saturday instead of Sunday, because I’ll be out of town on Sunday”.

If your considering cosiging for a family member you should also proceed with caution.

Photo by shahram sharif.

What do you think is the best way to help family members with money problems?  How did someone help you that was effective?

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  1. Shirley

    Number 5: Pray for them, and if willing, pray with them. Praying for God’s wisdom in our lives, including financial decisions and practices, should actually always be the first step. But other than that, there were some great tips on how to advise family about financial handling. Thanks for the article!

  2. Great article. This is a tough subject. I’ve got parents who have struggled with being smart with their money. Luckily we have the type of relationship that I am able to talk to them about it, but it was still hard. Thankfully they are now working Dave Ramsey’s baby steps after I got them the total money makeover.

    You are right that sharing your victories is really helpful. In an article recently I shared how my wife and I had paid off 21k in college loans in the last 8 months. my dad was like wow that’s awesome, we’re going to pay off our car next month. Hopefully they can keep it up and get debt free soon as well.

  3. Adventure-Some Matthew

    This is a hard topic. I struggle with how to help out family members (and close friends) financially. I don’t mind giving some money when it helps, but I worry about their over-all financial attitude. I will put some of these tips to use, hopefully I can help them out!

  4. Ken

    Don’t loan them anything that you would not give them as a gift. If they don’t repay, just tell them you are making it a gift (no strings). Then, don’t loan to them again. I like your suggestion of having them work for it.

    • Kostas @ Finance Zone

      I like the idea you had of treating it as if it were a gift. I think that is an excellent idea. It takes a bit of the stress out of the situation. I have noticed if you loan money once, some people will come back repeatedly, so you also have to know when to say NO and be firm about it.

  5. We’ve decided to not loan money to family members/friends. We gift money when someone is need and expect nothing in return. The last thing I want is a rift in the family over a loan.

    My mother-in-law has money issues. We, and her 5 other kids, had to pitch in the pay her rent at the end of last year. It hurts because no one wants their parents on the street, or struggling with money…but no one has come to a conclusion on what to do about the situation.

  6. Kristine

    This is a really sensitive issue. I immediately think of the saying, “The teacher will appear when the student is ready.” We want to help our family members and friends with money issues, but if they are not ready to receive help…the advice will fall on deaf ears. I think the best thing to do is be a good example, and be ready to help when your family/friends are ready.

  7. I have found that adult family members do not want to be told what to do with money. My brother won’t even tell me how much money he makes or how much debt he has. So I won’t ask, ever again. Lesson learned.

  8. Ed

    I agree it’s better to gift the money to family members. However, I’ve done this many times over the years with one family member and I’ve come to believe that it doesn’t solve the problem. I agree with #3, their lack of money management skills must be addressed.

  9. Larabelle

    My parents have major money problems they have always been poor money managers and it has gotten worse as they have gotten older. They have enough money to live comfortably however they mismanage it (cruises, clothes, home renovations etc). Anyway I was just talking to my Dad the other night on the phone and they do not have enough money to pay their IRS taxes. I refuse to loan them money….I am not sure how all this will go but I will not enable them.


    Are there any organizations out there that give money to pay off debt?
    if not, what would be a good debt program to contact so i can finally get rid of all this debt? Thank you.

  11. Brent Hutchinson

    What if your family member is approaching retirement age, and has no savings whatsoever, but tithes regularly? Coupled with the fact that they believe that they will be “raptured” in the next few years so it won’t matter? What if the preacher of the church they attend is preaching the same message? Is there a way to tactfully tell them that they are delusional? Or should I just not bring it up at all?

    • Mike

      As D.L. Moody said when asked what he would do if he knew when the Lord would come, “I would plant a tree.” We should act like the Lord will come any day, but plan like we will be hear for a long time. The unwise steward took care of the present and the future by wise planning and action(Luke 16). Pray for them- reality will probably teach them and open them up for counsel better than our words.

  12. Retired Barbie & Ken

    We are a retired couple married 52 yrs.+ and have made many foolish money decisions trying to “help” our daughter, son-in-law and young grandson. Before their marriage, we paid $25K of debt for our new son-in-law. We now realize he found a meal ticket with us. We had just sold our home and planned a move to a lovely Over 55 community. Told he could pay expenses, we put $50K toward their 1st home. Soon after, they couldn’t make payments, took out a home equity loan to help with payments and eventually sold the house. We recovered $25K. They moved out of state and rented for a year or so. We visited and after talking with them, decided to help again. We foolishly mortgaged our new home (fully paid for) to buy them a home in the state where they were living. It was agreed, they’d pay the mtg.and the home would be theirs someday. The mtg. payment wasn’t much more than the rent they paid. It worked for awhile but our son-in-law’s line of work suffered and we discussed another employment option which we were very familiar with. It required hard work but we had many years of experience and offered advice and help. Our son-in-law was enthusiastic. We then added close to $50K on to our existing $210K mtg. to purchase a business in their state. Our son-in-law had supposedly researched the business well. The business was a big disappointment. After purchasing equipment close to $25K on our credit card (some of which we still pay for) the business has failed. As for the mtg., for well over a year we have supplemented many payments and paid most in full each month not wanting to lose our own home which is mortgaged. We ask about new employment and are lied to regards interviews, jobs, etc. Our out of state family has been selling personal belongings and equipment we purchased to help pay their bills and living in the house totally free of mtg.responsibility. We pay the real estate taxes also. We just sold their home (ours) for a loss of $170K and will be responsible for the remaining mortgage forever. They are planning to rent again. Our son lives near us and had warned us about our generosity based on his good intuition about our son-in-law’s inabilities and deficiencies. Our son helps us now and tries to keep our remaining funds invested to help pay our own expenses and those we were not supposed to have. Our income has dwindled, we had to sell a car we had purchased in 2010 and now, in our mid/late 70’s our retired life has become a worry. Due to being too generous, trusting and most of all foolish, life has changed and because we now recognize the faults and incompetence of our son-in-law, blindly ignored in the past, and avoided by our daughter. We have reached an impasse in conversation as they make excuses for their failures and continually avoid honesty. We have learned a hard lesson as parents and wanted to share this. Unfortunately we don’t have any rich relatives.

  13. Retired Barbie & Ken

    Mortgaged our home to purchase one for daughter & son in law..added to mtg. to buy him a business he supposedly researched… purchased equipment (still paying for some) failed, equipment sold, he’s out of work, told many lies to cover up (daughter enables him)…we’re paying full mtg. for many months, partial payments prior…we got nothing back financially…sold our car, retirement (in our 70’s) ruined..we’re worried. Just sold their house(we own it) and lost $170K and will be responsible for remaining mtg. forever. We were foolish, trusting and too generous. We have no rich relatives. As for the daughter & son in law…they’ll leave to rent somewhere and aren’t speaking to us because we’ve said “hurtful” things. Can you believe it? Hard lesson learned.

  14. Kathy

    Everyone is not having problems because of bad financial decisions. I am a widow supporting myself. I lost my job. I had enough money saved up for a couple of months. I have been looking and applying for jobs constantly. That money is now gone. I have been doing odd jobs for people and having garage sales to make ends meet. I have finally gotten a part time job but I wont get paid for weeks. This is only a temporary situation for me and not a way of life. Not one person in my family has offered to help me. Not with bills, groceries, or anything. My parents are deceased. I know if they were here they would help me. My family all claim to be Christians. They pray for me. Well I read a verse that said if the poor cry out to you and you don’t help them, I will not answer you when you cry out. Actions speak louder than words. This will change my relationship with my family. I probably will not have much to do with them anymore. You should assess each situation before you judge. If someone needs temp help why not offer. God will bless you.

  15. Chandler

    Realize that all consequences aren’t bad. Some of the lessons I have learned the best have come as a direct result of feeling some pain.

    You really appreciate heat when you come home to the power being turned off because you neglected paying the gas bill. And if you learn from your mistakes, you will find a way not to let that happen again 🙂

  16. Richard Jonas

    Sometimes you just have to accept a family member for who they are, warts and all. Acceptance allows me to love them, regardless of their financial situation. It also means that I don’t accept responsibility for the messes they create for themselves.

    Also, I believe it’s better to just give the money as a gift, instead of as a loan. That, it seems to me, is a good way to let the grace of God flow through us into the lives of others. It also eliminates all the awkward relationship weirdness that comes with a loan.

  17. Nchise Delphine Nchang

    Don’t loan them anything that you would not give them as a gift. If they don’t repay, just tell them you are making it a gift . Then, don’t lend to them again.

  18. terrance

    I have a family member that i help out with bills quite often. I don’t really mind, but i just don’t want them to become too dependent on what i can give them. I want to make sure that they are still working towards bring in their own income. As long as they are honestly working hard to generate their own money, it doesn’t bother me.

  19. I like #5 (the first comment) that Shirley proposed above. Also I agree with #3. Money is usually not the problem, The real issue sometimes is the lack of financial literacy. I always think that it’s important to teach people how to fish rather than hand them out the fish. So, if we can teach the person in financial trouble how to become financially literate, that is ideal. However, that is where #2 comes into place. Money is a very touchy subject and it is very difficult to talk about it, especially if the person we need to speak with is older than us. Great post!

  20. Mike

    We had an experience that was both good and bad that involved my father-in-law. While trying to get him signed up for heat assistance, we had to submit a financial statement. That is where we found out he was in disastrous financial shape.

    He had 3 get-rich-schemes sucking money out of his checking acct.(1 of them he couldn’t account for how it happened. Actually it was a “free bottle give-away” deal that socked him every month afterwards). We got rid of them by closing that checking acct., and opening a new one.

    He wanted to re-roof the roof that leaked, so he lived on SS and saved his pension money to pay for the roofing. (A carpenter from our church had him pay for the materials in September and was paid off for his labor in December.)

    His mortgage was crushing him financially, and his payment was going in late each month, incurring late fees. He missed one payment because he lost the statement.
    He was writing “hot checks” every month, covered by the bank as a high interest loan.

    Bill collectors were calling so he refused to answer the phone until the 8th ring.

    He had a boarder that only paid $100 per month rent (no Utilities). We, as power-of -attorney, increased the boarder’s rent to $300/month and half of the utilities( still below market rate with full use of a garage, attic, living room full of his stuff, and use of the whole house for anything) . He moved out and found another place.

    Why did he get into such bad financial shape? From what we can piece together, he tried to help out my sister-in-law and her 4 children when she got into desperate straits when her husband got sent to prison for long term. He bought a house(mortgage) to house them when they lost their 1st home. He paid for repairs and any other expenses they had concerning the house or car. Life was very hard for my sister-in-law and her kids and my father and mother-in-law tried to help when they could, but it wasn’t always enough. Helping them put them in financial straits, and it carried over when my mother-in-law passed away.

    When my F-I-L had a stroke in 2010, we didn’t realize that it diminished his ability to handle his finances ,We thought that he only suffered physically, but he admitted years later when we started helping him with HIS money that the stroke affected his ability to handle them.

    Some important details to note: When we found out his finances were in bad shape, my wife proposed a “partnership”, where she would go through the bills with her dad, he’d write the checks, and she would write out the simple budget that they would use (income on 1 side of the sheet, expenses on the other). She already had power-of-attorney when he had a stroke 10 years earlier, so she could act for him, in his behalf.

    Every bill was paid on time, and the bank worked on a repayment plan to pay off the overdraft loans.

    When my wife expressed to him that she was grateful that he let her do the budgeting because it taught her how to budget, he admitted that at first he was upset about the process( he ran his own money for 70 years), but if it helped his daughter to know how to handle money, he was glad! The two always had a sweet relationship, so it turned out even better.

    He was only 8 months away from paying off everything when he passed away at the ripe old age of 90.

    We were blessed with a man that deeply loved his children, and was humble enough to receive help managing HIS money. We lent him no money- we just managed it.

    As for our children, they have to make their own way in life. We won’t always be alive to come and help them, so we counsel them to make wise decisions. As Larry Burkett would say, “The same God that provided for us is the same God that will provide for them.”