How to say ‘no’ when asked for money

It’s human nature to want to help out those you love, but when does helping out go too far?

We’ve all heard of the bank of mum and dad – it’s apparently one of the largest financial movements in Australia.

According to economic analysis group Digital Finance Analytics, Australian parents are giving their children an average of $90,000 towards a deposit to put them on the property ladder.

Which is great, but the flip side of that situation is children or close family members or friends taking advantage of people’s generosity or naivety. It’s called elder abuse, and it’s an increasing issue that is often swept under the carpet due to shame and embarrassment.

So, when is it okay to say ‘no’ when someone asks you for money?

Read: Dos and Don’ts in the face of rising inflation

If you need the money back
If you are ‘lending’ the money without a formal contract, it’s always a good rule to only lend as much money as you will be comfortable to never expect back.

Whether it’s $20 or $2000, ‘lending’ very often ends up more of a permanent situation, and not expecting it back saves anguish if you’re likely to sit and stew about when the money will be repaid.

If it’s a larger sum and you feel more comfortable asking for a contract, the lawyers’ fees may be a small price to pay for financial confidence. 

If you can’t afford it
It’s obvious really, but many people want to help a loved one, even if it puts them in a difficult situation.

Ask yourself this: Will giving a sum of money affect your lifestyle? Will you be able to pay the bills next month or next year if you hand over the money? Could a financial emergency wipe you out?

Read: How retirees can secure their nest egg

Draining your savings to help someone out just puts you in their position. Would they be able to help you if you needed money?

Think long and hard about if the sum involved will damage your financial comfort zone.

You’re feel under pressure to pay
Being hounded to give money is a sure indicator the recipient is desperate, and it would be a good idea to find out why.

You should be under no pressure to pay. If you want to give someone enough money to buy a home outright, or even just a meal out, it should be an act of joy or love.

If you are feeling stressed or uncomfortable when being constantly hounded to help out with other people’s money problems, especially when they have been irresponsible, think very hard about handing any sum over, even if it is a fraction of what was being requested. It could be all the encouragement the person needs to keep up their campaign.

In this situation, it’s also a good idea never to discuss your financial situation with the person asking for money.

What seems like a large sum of money to others may be the money you need to get through retirement or fund vital renovations to your house.

And frankly, it’s none of their business.

Read: Find the resources to get yourself out of debt

They are irresponsible with money
We all know someone like this. Money just seems to drip out of their hands like water. Don’t enable them by funding their lifestyle.

So, how do you say no, if that’s your choice?

Be firm, don’t give a long explanation. If you expect to be further pressured, set some clear boundaries, and maybe set up a ‘script’ ready to go, such as “I am not in a position to do that”, or “I have other commitments”.

Don’t enter into an argument. Be polite but to the point. 

It could also be an opportunity to make it clear you have a policy of not lending to family or friends because you want to avoid any uncomfortable feelings.

Have you ever had to knock back a friend or family member who asked for money? Why not share your experience in the comments section below?

Written by Jan Fisher

Accomplished journalist, feature writer and sub-editor with impressive knowledge of the retirement landscape, including retirement income, issues that affect Australians planning and living in retirement, and answering YLC members' Age Pension and Centrelink questions. She has also developed a passion for travel and lifestyle writing and is fast becoming a supermarket savings 'guru'.

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