Giving Money to Loved Ones: 4 Things You Need to Consider, Ep #202

Are you in a place to help your kids, siblings, or friends? What if you want to help your parents financially? How do you give money to loved ones? This is when things get dicey. This is not an easy subject to think about. But you will likely face it at some point during your life. So in this episode of Best in Wealth, I cover four things you NEED to consider before giving money to loved ones.

Outline of This Episode

• [1:01] How do you want to be remembered?
• [3:02] How to give money to your loved ones
• [4:22] Question #1: Does your financial plan allow you to give?
• [5:59] Question #2: What is the money for?
• [7:28] Question #3: Is there another alternative?
• [9:57] Question #4: How can you set boundaries?
• [13:53] The money conversation is never easy—but it is important

Question #1: Does your financial plan allow you to help others monetarily?

Does your monthly cash flow allow you to give money away? Is someone’s need more than your monthly cash flow will allow? To give away money, do you need to save for 3–6 months first? You must remember that you cannot sacrifice yourself—and your family—for someone else.

Does your long-term plan allow you to give out money to a loved one who is in need? If you do not plan for these things but give your money away, you may be the one asking for money down the road. It helps no one.

Takeaway: Create a financial plan that addresses short-term and long-term giving.

Question #2: What is the money for?

If someone is asking you for money, you are allowed to ask what the money is for. If a parent or child needs money, make sure the reason adds up. Is it to pay off debt? Is it a one-time bill? Recurring bills? Did they lose a job? Is it gambling or drug addiction?

Takeaway: This conversation is not easy, but it is your right.

Question #3: Is there another alternative?

Why would you want to seek out other alternatives? Maybe they can handle the financial problem on their own. Maybe you can help them create a spending plan and empower them to pay off their own debt/bills. Throughout my life, I have donated time to the church to help folks who are in debt. I have taught Dave Ramsey’s Financial Peace University for many years. I take on pro bono cases on occasion to help people get out of debt.

Takeaway: Many people can tackle their debt head-on with the right help.

Why else do you want to look for an alternative? Listen to hear another reason!

Question #4: How can you set boundaries?

It is not a good idea to give loans to loved ones. Whatever you do should be a gift. Why? What if they cannot pay you back? What if they do not pay you back? What if you see them making poor decisions with the money? It will damage the relationship and that is not worth the risk.

If the loved one needs recurring money—and it is not a one-time gift—figure out what you can afford to give regularly (that your spouse agrees with). This will protect your short and long-term plan. And your loved one knows what they are getting. It prevents your loved one from coming back to you to ask for more.

What other boundaries do I recommend you set? When is it okay to say no? Listen to the whole episode to learn more!

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Podcast Disclaimer:

The Best In Wealth Podcast is hosted by Scott Wellens. Scott Wellens is the principal at Fortress Planning Group. Fortress Planning Group is a registered investment advisory firm regulated by the Securities Act of Wisconsin in accordance and compliance with securities laws and regulations. Fortress Planning Group does not render or offer to render personalized investment or tax advice through the Best In Wealth Podcast. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.

About the author, Scott Wellens

Scott Wellens, CFP® is an investment advisor and founder of Fortress Planning Group. After earning his Bachelor of Science degree from the University of Wisconsin-Oshkosh, Scott quickly ascended to become a Vice President of North American Sales at a major regional provider of telecommunications infrastructure. While financially successful in this role, Scott searched for ways to pursue his passion related to financial literacy and providing financial freedom for both his own family and others. During his search, Scott became curious about the significant gap he found in the financial services sector: he was unable to find a comprehensive financial planner that maintained a family stewardship lens without being attached to financial products. Scott decided to fill that gap by creating his own planning firm that maintains a strong passion for comprehensive, unbiased wealth planning that is genuinely client-centered.

Scott resides in Menomonee Falls, WI with his family. He is the father of three active and independent daughters who keep him on his toes. Scott is an active community member, serving on the Hamilton Education Foundation Board, serves as a Dave Ramsey Financial Peace facilitator and leads the All Pro Dad’s group at their local elementary school. Scott enjoys spending his free time visiting state parks with his family, reading, and watching the Milwaukee Bucks and the Green Bay Packers win ball games.

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