How to Help Loved Ones Financially

How to Help Loved Ones Financially

Lending a hand without breaking your bank.

Christine Benz: Hi, I'm Christine Benz for Morningstar. Many financially stable people may wish to help loved ones who are struggling financially. Joining me to discuss what can often be a sticky situation is Michelle Singletary. She's a Washington Post columnist, and she's also the author of a new book called What to Do With Your Money When Crisis Hits. Michelle, thank you so much for being here.

Michelle Singletary: Thank you so much for having me.

Benz: Let's start with something that you emphasize in the book. And you do cover this topic about how to help loved ones who are struggling financially. One thing you say is to just start with a self-assessment, if you want to help someone else, take a look at your own financial situation and make sure that you are actually equipped to do so. Can you talk about that?

Singletary: I'm a big believer in "to whom much is given, much is required." But you've got to make sure that your financial house is stable. And the more you have, you might sort of feel like, "Well, of course, I have this extra money, I've got this retirement account..." But you really need to look at what your needs are first.

Make sure that you're secure before you give out of your extra. And so it means that you got to know your numbers, you have to understand, for example, if you're older, how much you have allocated for healthcare, long-term care.

If you don't have long-term-care insurance, you got to make sure that pot of money is there. And then when you do that, when you've assessed it, and say, "Yeah, I've got some extra," then you start to think about: How can I help my adult children, my grandchildren, extended relatives, siblings?

I know for myself and my family, I've got the good job. And so there is a lot of demand on my salaries and savings from family members. And my husband and I have set up a system by which we help folks. And it is very, I have to say, it's pretty intense. And for a reason. There is a practical reason behind that.

Because once your relatives and friends and adult children know that you've got a system in place, they're not going to just come to you with willy-nilly stuff, right? They're going to come with when they really need the money. And that's what you want to hope for.

Benz: Let's talk about this system. You wrote in the book that it is important to have a conversation about the person you want to help's financial situation. So you need to get, as you call it, a little bit in their business. Let's talk about that. Because you want to be sure that, actually, you can help and that you're not just putting a band-aid on what is an ER-type situation. Let's talk about how you go through that assessment.

 

To continue reading, please go to the original article here:

https://www.morningstar.com/articles/1032992/how-to-help-loved-ones-financially 

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