Helping Relatives who are in Debt

There are certain circumstances that may occur when you will find relatives in need of financial help. Even if you are able to help them out financially, it may be wise to see if there are other ways to help them out. 

If it is because of a job loss or medical expenses, it may be necessary to gift or loan them money. Even though they are relatives, it is important to have the loan agreement in writing, such as payment terms, interest rate etc. If you can afford to lose the money, some experts suggest giving it as a gift instead of a loan. If they know they owe you the money, it may make family gatherings uneasy if they are unable to repay the loan.

Also, by making it a loan it will seem more official and may stop them from coming back for money multiple times. 

If you are uncomfortable giving them cash, consider giving them gift cards for certain retailers, such as the grocery store, gas station etc. This gives you more control in how the gift is going to be spent. 

If they are in debt because of poor budgeting and spending, then it may be wiser to either teach them how to create a budget and spending plan, or find them professional assistance. It may be responded to better if the advice is coming from someone besides you. This is also a reason to reconsider loaning money to a relative. If you don’t agree with the way they are spending money, it may disrupt your family dynamics, with them owing you money and then spending money on other things.

It may be possible to give them a job if they are unemployed. In these cases, as in loaning money, make it official and let them know they have the same rules as the other employees. They should know from the beginning that they will not be receiving special treatment just because you are relatives.  As in loaning money, this should be considered carefully before proceeding, since it could cause problems at family gatherings.

If you are unable to help out your relative financially, there may be other ways to help, such as babysitting, giving them rides if they don’t have a vehicle or can’t afford gas

There are many times a relative may be in need of financial assistance. There are ways to help them besides just giving them money.