Someone you love needs money and they are asking you. Don’t reach into your wallet before you take a moment to think.
* Consider the problem. Money isn’t the solution if the problem is that the relative spends too much, saves nothing, or doesn’t work. Your money only puts off the consequences for bad decisions.
* Ask yourself what you can afford. You can’t impoverish yourself now or in the future. If you do, both you and your relative will be broke and you will both need help. So consider what money you could actually give without putting yourself (or your retirement and emergency money) in danger.
* Is it a loan or a gift? Cash given to anyone is gone as soon as it is out of your hand. You can assume you will never get the money back. If you can afford to give money for a genuine emergency, consider making it a gift. You can specify that while you are happy to give them the gift, you won’t be able to make another gift.
* If it is a loan, you can establish terms. According to CNBC, you could consider writing up a contract with the terms. Include payments that you expect and consequences. You can specify that if the money isn’t paid back, the borrower can’t expect help in the future.
* Don’t give cash. If the relative can’t pay the rent, and you are able to help them, write a check to the landlord.
* Have the courage to say no. Some people recommend just saying no, with no explanation and no apology. Some recommend a simple “I am not able to help you right now.” Others recommend adding some truth: “My financial support of you over the years may not be helping the way I had hoped.”
You can always offer babysitting, or direct them to services like credit counseling. Maybe even set up a GoFundMe page.