Money Talks With Your Siblings
Solutions for handling sticky financial situations with your family.
Your brothers want to take a family cruise. Maybe you can’t shell out that kind of cash or you would rather save your money. How do you tell them that you’re not participating in the trip?
There’s no need to concoct an elaborate excuse or give details about your finances. Just say, “Unfortunately that’s not the kind of trip I can take right now,” and wish the rest of the clan well on their voyage. Then follow up with an idea for a cheaper way the family can spend time together—say, a reunion or a staycation at your home.
If making such a counteroffer feels tricky (perhaps you’re afraid of offending your brother who spent 12 hours researching cruise lines), then shift the blame. “I tell my clients to make me the bad guy,” says Nicole Francis, a New York City–based certified financial planner. “Even if you don’t have a financial planner, you can say, ‘My budget has me spending less money on vacations and more on retirement savings.’ That maneuver takes off a lot of the pressure. You’re not saying no—your budget is saying no.”
Your sister wants to borrow money from you. Should you ask her about her financial status?
Yes—but first think about what kind of person your sister is and whether you want to lend her any money in the first place. Is she disciplined or rashly impulsive? Does she want the money for a worthy pursuit (nursing school) or a flight of fancy (a trip to Fiji)? If you feel she is borrowing money for a questionable reason, think twice about giving her assistance. If you do decide you want to help, ask her to provide basic financial data (bank statements and a record of all her debts), the experts say.
Once you settle on the amount and the duration of the loan, you should determine whether you want to charge interest, says Mahnaz Mahdavi, Ph.D., a professor of economics and the director of the Center for Women and Financial Independence at Smith College, in Northampton, Massachusetts. Fearful they will appear greedy, many people shy away from charging their relatives interest, but it can be a good financial move for all concerned, Brad Klontz, Psy.D., a certified financial planner and clinical psychologist based in Kauai, Hawaii, and a coauthor of Mind Over Money ($10, amazon.com), notes.
For example, if your money in the bank earns an unsatisfying 0.5 percent and your sister would otherwise pay a studentloan rate as high as 7 percent, then both of you would benefit from a loan at 3 percent. And if the deal serves you both well, says Klontz. it’s less likely to engender guilt on your sister’s part or resentment on yours.