You’re out to dinner with a friend, and the bill comes. You get ready to pony up your half, and your friend sheepishly asks, “Can I pay you back later?” Not wanting to seem like you don’t trust your friend, you agree.
Later never comes. You go out for drinks another day, and it happens again. Somehow your friend is always able to go out, but never able to pay.
Sound familiar? Here’s the problem: every time you offer to foot the bill, you’re acting as a financial enabler.
Any of us can be a financial enabler, whether we realize it or not. Parents to kids (and vice versa), friends to friends, even spouses. Read on to find out if you’re enabling, why it’s more damaging than helpful to everyone involved, and what you can do about it now.
What does it mean to be a financial enabler?
Everyone runs into money trouble sometimes. And lending money during those times doesn’t automatically make you a financial enabler.
But when that lending becomes more of a routine – or if the other person doesn’t stop spending money they can’t afford – you might have a more serious problem on your hands.
Certified financial planner Kaya Ladejobi explains how enabling can happen.
“The areas that I typically see clients enabling others is by bailing out friends and family members who make bad financial decisions,” Ladejobi says. “The ones being bailed out never seem to learn their lesson since they didn’t suffer the consequences of bad decisions in the first place.”
You know that friend who borrows from you every time you go out? If you allow it, they never have to learn to say no to plans that are out of their budget – or to find a way to stop spending money and still be social. As much as we want to help, enabling only prolongs the problem.
How to provide financial support without enabling
1. Listen to your gut
Founder of Empyrion Wealth Management, Kimberly Foss, discusses this issue on the Watching Your Wealth podcast. One of the first pieces of advice she offers is to trust your gut.
No one is immune to money mistakes, not even the most responsible person you know. If you believe something is off, consider that before you act.
And if you want to make sure your money is going to the right place, follow the advice of psychologist Dr. Helen Odessky. Direct payments to creditors or landlords rather than to the person borrowing from you.
If the other party doesn’t like the sound of that arrangement, that could be a red flag that they’re not telling the truth about why they need the money.
2. Structure your support
Foss and Odessky both speak to the importance of structuring your support. In Watching Your Wealth, Foss suggests offering help for specific timelines. Dr. Odessky echoes that sentiment.
“Get clear on how long you will be providing assistance,” Odessky explains. “For example, saying, ‘I can help for six months by contributing X amount of dollars’ will create the kind of boundaries both parties need to feel safe with the arrangement.”
3. Manage expectations
It’s important to manage expectations throughout the process. Even if you agree to an arrangement upfront, the other person might think they can bend that a little later. Make it abundantly clear that this won’t be an option – and then stay firm in your resolve if the question comes up.
According to Dr. Odessky, this isn’t just something that protects you. It also helps create an environment that is empowering rather than enabling.
4. Teach them to fish
If you want your financial support to go the extra mile, Foss suggests not just lending money but also “teaching them to fish” – helping them understand how to help themselves. Ways to do this include:
- Offering to help create a budget.
- Brainstorming ways to increase income.
- Discussing different debt payoff techniques.
If you’re a parent helping your child (even your adult child), then doing any of the above can be a great way to help them mature financially.
And if their financial triggers are the same as yours, sharing your story and the things you learned about how to stop acting on those triggers can be tremendously helpful and empowering.
In this case, showing some vulnerability could help you and the other person connect on a deeper level. This could lead to some honest and productive money conversations.
5. Take care of yourself
Sinking your finances to help someone else doesn’t do you or the other person any good. You’ll build up resentment – and when both of you can’t pay your bills, what can you do then?
This step may sound fluffy, but it’s serious. Never give financial support unless you can comfortably afford to lose the money you’re lending. If you’re not able to operate on the assumption that you’ll never see those dollars again, then you’re not in a position to help.
And even if you can afford it, there might be other ways you can help. Odessky explains:
Ask yourself if the financial arrangement will cause you to resent the person. If the answer is yes, perhaps you can help in another way. For example, you could help them develop a resume while they look for a job and do mock interviews with honest feedback. You could even offer free babysitting while they’re at work or help prepare meals.
Financial support can come in a variety of ways. You might even find that offering your time or skills is even more helpful in the long run.
What to do if you need help
Let’s say someone’s financially enabling you. Ladejobi offers some tips to help you move forward without being enabled:
- Be the social organizer so you can see your family and friends in a more budget-friendly manner.
- Share your situation and goals with your loved ones, so they understand what you’re dealing with.
- Ask for an accountability partner so you can learn and solidify money habits that lead you to financial freedom.
It might seem easier to ask for help footing the bill than telling the truth about your financial woes. But being open and honest with your loved ones creates an environment in which you can release any shame you might be feeling. They, in turn, can give you support and ideas to make it better.
Remember, no one is immune to financial mistakes. Chances are, opening up will lead to a slew of money stories you didn’t know your loved ones encountered in the past. And that could lead to just what you needed to get through this – solidarity, community, and actionable advice to move forward with.
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