As Gen Y gets older, we’re reaching financial stability in greater numbers, and that means that the family members who helped us out financially for so long may need our help now. Baby Boomers are getting older, and that can come with increased medical expenses, or even retiring in a less secure position than they thought they would.
I work with many clients who provide monetary support to parents, siblings, and other relatives, and together we find ways to work family help into their budgets. It’s possible to make financial gifts your family without sacrificing your own future, and I often recommend it over lending relatives money and dealing with the fallout out of your relationship if they can’t, or won’t, pay you back.
Put your oxygen mask on first before helping others
Just like they say when you’re on a flight: “put your oxygen mask on first before helping others.” If you’re struggling, you need to reach a place of stability before you can afford to gift money to family. If you have debt (especially high-interest credit card debt), expensive medical bills for yourself or your children, or you just aren’t able to end each month with money in the bank, working those issues out needs to be your priority.
Helping yourself first also includes saving for your own retirement, by the way. If you put that off to provide financial support to a relative, the next generation is going to have to do the same for you. Give your kids the gift of your own security in retirement!
Set a “family help” budget
If you’re meeting your monthly expenses, saving for retirement and other goals, and you have some cash to spare, you now know exactly what you have available to gift to family. Regular gifts can take many forms (and, of course, you can adjust the amounts as your situation changes). You can do things like:
- Gift a set amount of money each month for them to use as they choose
- Hold an amount in savings to help in case of an emergency
- Pay for long-term care insurance premiums for your relative so they’ll be able to afford assistance as they age and are less independent
- Pay for certain specific expenses, like groceries, cell phone bills, utility bills, or homeowners insurance
- Even small gestures like adding your relative to family sharing plans for their cell phone, or streaming subscriptions like Netflix, can help those on a limited income
Non-financial ways to help
If gifting money isn’t in your budget right now, there are still lots of ways you can support your family. You can give older relatives rides to doctor’s appointments, invite family over for meals or bring a meal to their home, or help out a sibling with young children by offering to babysit for no charge. Never underestimate the power of giving free tech support to your grandma! The gift of your time is truly valuable.
Know when to say “no”
Sometimes, gifting money to a loved one ends up enabling unhealthy behavior. If your family member suffers from spending, gambling, or drug addiction, giving them money will just keep them on that dangerous path. You can help by, say, paying for therapy or rehab, but simply giving cash is not helpful.
Another time you can say no is when you disagree with how the money will be spent. For example, your relative claims to need help affording their rent payment, but after you give them money they go on a lavish vacation or shopping spree instead. You can make sure your money goes to the right place by sending it there yourself (like writing checks to their landlord) but you can’t gift a family member out of being financially irresponsible.
Helping family financially is such a kind and generous act, and I encourage you to work it into your budget if you can do so without shortchanging your own financial goals. Remember, building a solid financial foundation now will allow you to be more generous with your family in the future.