We are often motivated to lend or give our family members money for some truly beautiful reasons. We want to care for our family members no matter their age, and we want them to know we care for them.  Let’s talk about five times you should not give money to your family, and what else you might consider.

Approximate read time: 8 minutes

Five reasons you should not give or lend money to family:

Reason #1: You feel guilty

I’m a parent myself, and I clearly remember denying my child a toy in the grocery store because our finances were right on a razor’s edge. That was 20 years ago and I still recall it. I have the image of that little heart-broken face burned in my mind. Guilt motivates us in unexpected and far-reaching ways. And frequently choices made from a place of guilt do not serve us long-term. It’s very rare that we consciously follow the cause and effect of “I had to say no to you when you were a child, and it broke my heart… the least I can do is make it up to you now.”

What you might consider

Examine the purpose of giving or lending money to your family member.

I’m not saying anyone should or should not lend or give their loved ones money, but it’s important to slow down the decision making process and understand the purpose of this money.

What is the purpose of giving/lending this money FOR YOU? What will this act provide to you? Peace of mind? Assuaging some long-held guilt? Ending an argument? Something else?

What is the purpose of giving/lending this money FOR THEM?

Reason #2: You want to make their lives better than yours

I get pushback on this because isn’t that OUR JOB as parents?

Of all of the lies we’ve been told about our responsibilities as parents, this is probably the one that undermines our wellbeing the most. Specifically because how most of us heard that expectation is that our family should have nicer things, a better education, eat better, and have more opportunities than we did. But how do we actually define “better”?

Of course I’m not saying we shouldn’t want our children and family to be happy, but it’s too easy for us to see our family’s lives (belongings, lifestyles) as a commentary on us as parents. And it’s difficult to know when we’re no longer on the hook for that.

How much of your family member’s life and lifestyle do you hold yourself responsible for?

What you might consider

Consider these questions:
How do you define being a “good parent”?
How do you know when you’re no longer responsible for your family member’s lifestyle, happiness, or comfort?

Reason #3: You’re expecting filial piety

Filial piety isn’t a phrase we throw around too much, but this expectation lingers throughout our culture. The expectation is that at some point, our family will financially support us as we age. Maybe you did that for your parents, and they did the same for their parents. It’s a subtle expectation that has an outsized impact. How often have you heard that assumption spoken? How often have you thought about it?

If you had to guess, how would you think that expectation feels to your child(ren)? No one wants to think of their relationship with the people they love as transactional, but now might be a good time to explore this expectation.

Another element to filial piety is its inherent codependency. If you’ve at least at some level built your financial life with the implied expectation that your children will care for you later and then they are unwilling or unable to do that, you’ve exposed yourself to a huge amount of risk.

By supporting your family now, are you expecting them to repay that later?

What you might consider

If you have even the slightest suspicion that filial piety is lurking around, spend two minutes (and only two minutes) exploring what kind of specific risks this mindset has exposed you to.

Reason #4:  You feel forced or obligated

Any time you feel like you don’t have a choice, whether you are making yourself feel like you are out of options or someone else is encouraging that feeling, it’s time to take a pause.

Our brains don’t make good choices when we feel cornered, and often these quick, reactive, emotional decisions end up being something we regret later.

How much of the motivation for giving or loaning this money is accompanied by thoughts like “I don’t see any other way”?

What you might consider

If you can take some time to consider the details of giving or loaning your family money, take it.

What would be some other possible ways to get some of the values/positives of giving this money without some of the risks?

Reason #5: You are concerned about appearances

We might be loath to admit it, but our family is a reflection of us.

Sure we’d all like to say it doesn’t matter to us what our larger communities think of us, but in reality we humans are a social bunch. Being seen as part of a community means safety.

How much of your motivation to give or loan this money is tied up in the potential that others will see you a certain way?

What you might consider

Try this thought experiment: If your family member’s financial choices were suddenly made public to your close social group, how would you feel? How would you feel like you need to protect yourself from others’ perceived judgment of you? Be brave! No one will see this except you, so it’s safe to be honest!

One last element to consider:

How emotions impact decision making

As humans, we use emotion in our decision making.

We should NOT be working to actively remove emotions from decision making, but we should be thoughtful about HOW we use emotions.

Emotions are tools, but sometimes our emotional brains can get caught up and make decisions from a place of emotion, not just using them as tools.

Emotional decision making is typically fast. It’s a flood of emotion and activity, and in some cases can be kind of satisfying. Decision making  from a place of emotion also solves for just one thing.

By including emotion in decision making, understanding why it’s there and slowing down the decision making process, we are more likely to make a good long-term decision.

Including emotion into decision making slows down the decision making, and very often competing emotional motivations will bubble up. That’s good! That complexity is there to help. Now instead of solving for just one thing, I’m solving for two or maybe three things.

Slowing down decision making means we can look for and take advantage of other possible options.

Emotional decision making is lighting fast, reactive, and simplistic (solving for just one thing).
Including emotions in decision making slows down that reaction time, and adds in complexity.

Of course every situation and family is different, so anyone that tells you there is a right or wrong decision to be made in your particular situation isn’t doing you any favors. So what to do instead? Here is a collection of questions that may help you refine your decision making around whether or not to loan or give your family money. Not all of these questions will resonate, they’re just a jumping off point.

What is the purpose of giving your child this money?
What will this gift provide to you / your life?
What are some possible (even if unlikely) risks associated with this gift?
How could you prevent some of those risks?
How could you recover from some of those risks if they did happen?
What are some other ways you and/or your family member could manage this situation?

In short, none of us wants our family relationships to be transactional. Many families can manage gifts and loans beautifully, others end up in resentment, pain, and strained relationships. The biggest thing you can do here is to deeply understand your own motivations and slow down your decision making.

Making this decision less about the money and more about the act of giving or lending. Every decision we make has echoing impacts in our lives, and while we can’t be aware of every eventuality, by slowing down

Last updated: July 2023

Next Recommended Article: The Myths and Realities of Financial Independence