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How can you help your family members financially without hurting yourself in the process?

by | Oct 14, 2022 | Personal Finance

With socio-economic issues such as mass labour strike action, loadshedding, petrol hikes, and global economic downturns, South Africans are facing grave financial hardships. These hard times often hit some households more than others, and if your situation is slightly better than the next person, you might be propelled to offer a helping hand to your loved ones in a less fortunate position than you. But how can you help support your family financially without hurting your own finances in the process?

Although you want to help, honouring financial commitment made to struggling family members is often easier said than done. This is especially if your own circumstances is in essence only a stone throw away from the person you seek to assist. There are several ways you can help others without spending any money.

Help them downsize. It can make sense for your loved ones to downsize if their current home is too large for them to afford. Help them calculate the savings they would accrue from downsizing in order to decide whether it would be worthwhile. Their mortgage, housing-related costs, and the cost of the move should all be taken into account.

Ask them to move in. Examine their health, your existing way of life, and the other members of your household to see if they can live with you if they can no longer afford to live independently. Taking in your family members can have a significant favorable financial influence on them, frequently relieving them of their mortgage, rental obligations, and related expenses.

Help them budget better. Sit down with them and create a simple budget that considers their monthly income and spending if your loved ones are looking for strategies to stretch their money farther. If a person’s income is less than their costs and the balance is negative, breaks even, or is positive but they are spending too much, they should search for ways to increase their income or decrease their spending in order to live more comfortably.

If you do decide to assist, make sure you and the individual have a clear understanding of the assistance’s nature—such as a gift or loan—as well as any conditions for return. If you want to offer the individual something straight up, think about paying one of their bills for them, giving them cash, giving them gift cards, or giving them resources they will need.

If you can, think about getting them a job, helping them set up a budget, or connecting them to neighbourhood services like training or career counselling. If you wish to assist them with a loan, think about providing a personal loan or offering to co-sign for one they are applying for from a bank or other financial organization.

The need to put food on the table and pay for our children’s tuition can be a constant pressure in life, and that tension can make the thought of assisting others seem incomprehensible. However, you could feel pressured to go into your wallet if your friends and family are in a worse situation than you are. Take a step back, though, before you do this. You might not have enough money to support yourself, let alone anyone else, if your personal finances are in danger. Therefore, before attempting to assist others, you must attend to your own needs.

Sadly, this can require reducing payments to family members until you have more information about your personal circumstances and career. They can find solutions to their current situation by cutting on their spending and find ways to budget in accordance with their means. It is important to always ensure that you are financially stable yourself before landing a hand, because giving generously could sometimes be the difference between having enough money for rent or not.

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