Setting boundaries is important in everything in life. Creating healthy work boundaries ensure you have enough time for yourself even with a demanding career. Relationship boundaries are no different. Financial boundaries, on the other hand, ensure that your money doesn’t become a problem in your relationships. Some family situations can get nasty once there’s money in the conversation, so it’s best to set financial boundaries.
What are financial boundaries?
Financial boundaries are proactive and protective limitations you set for your money, specifically when it comes to loved ones. Being intentional about how you talk about money, how you spend money and who you talk to money about…ensures that your family members won’t look at you as a cash cow whenever they need a loan. You might have family members who already beg you for cash or gifts every other holiday–and it gets annoying. Here are ten fundamental tips for setting financial boundaries:
Setting financial boundaries with yourself
Your financial boundaries start with yourself. Before setting financial boundaries for other people, you first have to decide what these are. Here are some tips on setting financial boundaries for yourself.
Set financial goals
In general, setting financial goals is the first step toward growing your wealth. You’ll also have a motivator like a new car, a nicer house, or a better life for your family. There are even more benefits to setting financial goals, so check out my article.
Financial goals also enforce boundaries as they give you a reason to not lend/give your money. People will be more understanding when you turn them down when you say you’re saving for a car.
It’s your money
Remind yourself that the money you earn is yours to do as you see fit. You’re the one who put in the hours and worked for the paycheck. Nobody is entitled to your money unless you’re indebted to them–not even your family members. Not even Shaquille O’Neal gives money to his family members just because they asked for it.
There are no pre-written rules when it comes to financial boundaries
People seem to think that there are “rules” when it comes to giving money. One example “rule” is that the guy always pays for the first date. The truth is: that there’s no real reason to follow these rules besides societal convention!
Instead, you should make your own set of personal rules and budgets based on your values and your loved ones. The best way to make this personal set of rules is to talk about them with them. Maybe you have loved ones who don’t want you to spend money on them and feel guilty when you do. Not only are you making rules for your money, but you’re also setting expectations with them.
Setting Financial Boundaries with other people
Once you’ve decided what your financial boundaries are, the tricky part is declaring those boundaries to other people. Here’s how you can set financial boundaries for your loved ones, such as your spouse, family, and friends.
Don’t openly talk about your money
The secret to never having someone ask you for a loan is to never talk about your net worth. After all, nobody will ask you for money if they don’t know if you have it in the first place!
…Except to your spouse
You have to talk about financial boundaries with your spouse. You have to answer a lot of questions, like who pays for what? Do you have a shared bank account? How much money do you each contribute to the household every month? Getting a budgeting app for couples can help a lot–and I have an article on the topic if you want to learn more.
Ideally, if you’re both earning, you still set aside a bit of money for yourselves. Your system will depend on your dynamic as a couple. Some couples designate one person to pay for the necessities, while their partner pays for all the luxuries. The only way to find out what works for both of you is by talking to your spouse.
Set ground rules for lending money
If you’re okay with lending money to family members, then you’re going to have to set ground rules. Make it clear when they’re supposed to pay your loan back and if they’re going to have to pay interest. It’s your responsibility to make your financial boundaries clear. To be safe, it’s best to have the rules for the loan in writing.
Setting financial boundaries means having tough conversations
There will be people who unfortunately won’t respect your financial boundaries. When this happens, you might feel guilty for saying no when other people intrude on these boundaries. This is when they expect lavish gifts or loans when they ask for it–even when you’ve told them you no. You need to be able to stand up for yourself and have these difficult conversations when they happen. Don’t be afraid to put your foot down when it comes to it!
Don’t play favorites when setting financial boundaries
Try to remain fair when it comes to setting financial boundaries. If you’re more generous when it comes to gifts to some family members over others, it may cause drama. Make sure your financial boundaries are the same for all of your loved ones.
Speaking of gifts, the holidays are right around the corner! Here’s my article on how you can increase your holiday gift budget!
It’s not your duty to pay the bill just because you have more money
Just because you make the most or have the most money doesn’t mean everyone else eats free! Unless you’ve said that ladies’ night was on you, you have no obligation to pay for everyone’s drinks or meals. Don’t let yourself be guilt-tripped into paying for everyone just because you can.
Make them earn it
As mentioned previously, Shaq doesn’t give his kids money just because they’re related to him. Instead, he wants them to earn an investment or loan from him. That means he requires them to pitch to him not as a father, but as an investor. You can take a page from The Diesel’s playbook and ask people who ask for loans to do the same. In addition to alleviating risk when it comes to loaning money, it might even be an investment to earn more money!
Those are just 10 fundamental tips for setting financial boundaries. You’ll have access to even more by signing up to join the money squad. As a member, you’ll receive exclusive financial tips every week that get you closer to 7 figures. It only takes a few seconds to sign up and is completely free–so sign up today!
