Family Money Management Advice

Family money management issues are often related to the borrowing and lending of money within the family system.

Have you ever lent money to someone in the family and they failed to pay you back?

There is nothing that will destroy family relationships faster than emotional baggage related to owing money.

If your money is in control of you instead of the other way around...

You Need a Budget!

You cannot achieve control over your money if you lend it to people who cannot pay it back. Indeed you must ask yourself WHY you lend money to people who do not fulfil their obligation to pay it back.

Family money management advice is offered here to help you achieve better control of your money and manage money within the family in a more controlled and organized way.

Family Money Management Advice for Organized Living

Organized living is all about setting up systems so that you can have some predictability in your life. Nothing can lead to a chaotic life faster than not having control of your money. And when you have lost control of your own personal money within the family system you set the stage for damaging family relationships.

One of the functions of a family is to share resources so it is only natural that family members might want to help each other out by lending money if they are able. The motives are always pure but the results are not that predictable.

It is very difficult to repossess your adult child's house if they do not make the mortgage payment and are you prepared to take away the electric guitar because your son defaulted on the loan even though he promised to pay you back?

A finance company or a bank has no hesitation in going after the collateral for their money when someone has defaulted on a loan, but then they really do not want to ever see that person again. The same cannot be said for your family.

If your money is in control of you instead of the other way around...

You Need a Budget!

More OMS family money management advice to help you set up boundaries and structure for money management within your family system.

• assess risk - it doesn't matter who the family member is who has asked you for money you must assess the risk. You might want to help someone in the family out with a loan but look at the possible reasons why this person is coming to you instead of the bank.


• Why would you lend money to a person who has already been turned down by a bank? If it is too risky for the bank why is it less risky for you?
• Does it make sense to loan money to a parent or a child who has no way to pay you back?
• Does this person have a history of poor money management? Do they owe money to anybody else in the family?


• never co-sign a loan - when you co-sign a loan you are taking on the financial risk but you do not have the financial asset of the collateral. In case of default on the loan the lending institution will come after you for that loan and you will be liable for the balance. That is what a co-signing responsibility is.


• give your adult children money - give freely and regularly for birthdays and gift giving holidays. Give what you can afford but give freely and without conditions. This is a gift not a loan. If you have to say no to a loan request you cannot be accused of being cheap or tight with your money if you give freely. The first piece of advice still stands - never give money you really need or want.


• say no - you have no obligation, duty, or responsibility to lend money to your children or any family member. See Assertiveness Training for Organized Living lesson #3 "How to Say No"


• formalize all loans with notarized statements - OK so you really want to help out your brother-in-law. If you can afford it, and if you think he is good for the loan and if you are prepared to never see that money again go for it, but formalize it with a notary public (at your brother- in law's cost). Approaching financial transaction this way between family members makes it real and spells out the terms of the loan and the consequences of default.

You will not even need any family money management advice if you teach your children about money so that they can avoid a chaotic and crisis prone life.

With good money management skills they won't have to come to the bank of "Mom and Dad", but will be able to manage their own finances.

Now That Makes Sense for Family Money Management!

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Here are all the pages on money management for organized living (including this one) offered on this website

Personal Money Management Skills - organized living is not possible without competence in personal money management. The Absolute Basics of Money Management for an organized life. Money Management Advice for Organized Living - Are you in the black or in the red? If you do not know the amounts to enter into each category when sorting your money you need a money management worksheet. Money Management Tips for Organized Living - Minimum requirements for understanding your money and tips to help you control it. Ideas for teaching money management skills to your kids. Family Money Management Advice - ideas to help you gain better control of family money management issues like borrowing and lending to family members. A description of the Envelope Budget System.

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