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Have you had the situation where family or even close friends have asked you for money?
I’m not talking about covering them if you go out and they end up being a little short to pay for their meal.
I am talking about asking you for a more substantial amount of money.
While we want to help those we love in a difficult situation, lending or loaning them money might not be the smartest financial move.
In fact, many people want to say no, but aren’t sure how to do it nicely.
In this post, I share the best tips for how to say no to family asking for money.
If you follow these guidelines, you should be able to avoid loaning out money and still keep everyone happy.
Table of Contents
How To Say No To Family Asking For Money
The Biggest Problem With Giving Relatives Money
When open the door and give money to loved ones, the problem becomes they will reach out to you on a regular basis.
There is no incentive for them to improve their financial life if they have willing people giving them money.
Sure there are some people who ask for money because they really are down on their luck and not only will pay you back, but won’t ask again in the future.
But most people in this situation will not learn from it, nor will they put in the work to improve things either.
So while it is much easier to just say yes and give them money, know that you are opening the door and will have them keep asking you for more money for a very long time.
Ask Them Why They Need The Money
Before you say yes to any request for monetary help, the first thing you need to do is get to the reason why they need the money in the first place.
From this question, you will learn if the money is needed for a true emergency or if they just want money because they don’t have the patience to wait until they are paid or have enough money saved up.
If it is a true emergency, you can take one of three routes:
- Loan them the money
- Agree to giving the money but have them earn it
- Say no
Emergencies can be tougher to say no to than if they just want money and don’t have a good reason for it.
And as you will see, by opening the door with this first question, you can possibly help them out in other ways besides financial support.
Tell Them You Don’t Have The Money
The best way to say no is to tell your relative that you would love to help them but that you can’t at this moment because you don’t have the resources.
You can always explain to them why, but it’s important to remember that a simple “no” and firm boundaries is enough to get the job done.
You don’t owe anyone an explanation, even your family.
Many times, this is a good enough reason for the other person.
But some people might keep pushing, hoping you will give in.
In this case, you will want to explain that your own finances aren’t great and you just can’t loan the money.
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You could even say that while things might look good from their perspective, the reality is you too are experiencing tough times too.
Be Direct And Clear When You Respond To Their Request
There are some people who don’t know how to say no to family asking for money.
What they end up doing instead is that they put off their response or they make false promises about getting back to them later that only makes the situation worse.
The last thing you want to do is be unclear about your intentions in order to appear nicer to your family.
When someone asks for money and you already know that the answer is no, say so immediately.
Don’t make any promises that you can’t fulfill and don’t say that you’re going to think about it if you already have a clear answer.
This will only confuse and frustrate them and make the process of saying no to them that much more difficult.
Be clear and direct about your intentions so that they can turn to other resources for support.
Use Past Experiences
Maybe you offered financial help in the past and none of the money has been returned.
Now you are tired of the situation and no longer want to help out.
What do you do?
Have an honest discussion about how they’ve used your money in the past or how they haven’t paid you back when you have loaned them money.
This type of honesty and transparency can be difficult, but it’s crucial if you want to get across the point that you don’t want to give money to them.
Pay For The Item Directly
Maybe you want to say no to giving them extra cash because you know the money probably won’t go to the intended request.
In this case, what you can do is offer to pay directly for that thing if you do have the money.
If they don’t actually want support and they just want money to spend, they’ll likely turn your support away.
For example, maybe they want the money for an addiction they have, but they don’t want to tell you this is what the money is for.
So instead they ask for rent money.
If you offer to pay their rent, they may decline.
However, some people will still take you up on this offer so you have to be careful if you think of using it.
Set Up A Repayment Plan
Another good idea is to sit down with them to create the terms of a repayment plan, and what will happen if they don’t pay you back or don’t use the money as they specify what the money is supposed to be for.
This includes specifying an interest rate to be charged on the loan as well as showing how much money will be repaid in total.
This can often be a deterrent for those who don’t want to be bound by terms and conditions.
Make Them Work For The Money
Again, this recommendation largely depends on how responsible the other person is.
Responsible family members can receive a firm “no” and turn elsewhere.
Those who are less responsible may continue to pester you for money.
If the latter case is the one you’re dealing with, strike a deal with them to make them work for the amount that they wish to borrow for you.
This way, you aren’t just giving money away.
They are providing you with a service of value to you and you are compensating them for the time spent taking care of the tasks.
This can be as simple as washing your car or taking care of your yard work or asking them to do something a bit more involved like helping you with administrative tasks in your business.
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Other Ways To Offer Support
In some cases, we may want to help out our family but simply don’t have the money to help them out.
Other times, we know we can support them in other ways that will help them deal with the financial situation they are in.
For example, let’s imagine that you have a relative who’s having trouble paying for childcare and needs help because they can’t bring their child to work.
But they need their job to pay for rent and other essentials.
Obviously, pitching in once won’t deal with the long-term issue as childcare will still be out of reach despite this one-time payment.
Additionally, you probably don’t have the funds to continue pitching in for their childcare so that they can keep their children in daycare until they get home from work.
So, what can you do?
You might be able to find a solution by gathering your family members together and coming up with a schedule where you can help your relative out by taking their child for a brief period of time throughout the week.
This way, they get the support they need temporarily and no one has to give money they’re unable to give towards something that’s unsustainable in nature.
Another example might be someone who needs rent because they can’t get other forms of aid and rent is due.
Helping them find other job opportunities, start a side hustle, or even taking them back and forth to job interviews can make it so that they can bring in extra money, even if you don’t have it to give.
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Offer Financial Coaching
Finally, another thing you can do is sit down with them and offer to help them work on improving their finances.
You can help them understand the basics like what a checking account and savings account is.
Teach them the importance of having an emergency fund.
Show them how to start and follow a budget, as well as some tips to help them save money and lower their expenses.
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While their finances won’t improve overnight, you will set them on the path to being smarter with their money.
Because of this, it is a great way to offer support that doesn’t include parting ways with your cash.
Figuring out how to say no to family asking for money can be difficult, but it’s more than possible.
Using the strategies outlined above can help you either say no to those who need too much, or to those who don’t actually spend the money on what they say they need the cash for.
At the end of the day, the best thing you can do is to simply say no.
You don’t need to feel guilty about it either.
It is your money and you worked hard for it.
And if you do want to help, use the suggestions listed to offer help in ways that do not include giving family money.
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I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.