Picture this: Tabatha, 29, is a registered nurse who makes about $80,000 a year. She’s always been responsible with her money, which means she’s debt-free, has an emergency fund and is setting aside money for her future.
But her mom, who is $20,000 in debt, is now pressuring Tabatha to take out a loan to help her pay it off. To make matters worse, the rest of Tabatha’s family is piling on the pressure, too.
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Since her mom has a history of being financially irresponsible — and emotionally manipulative — Tabatha has put her foot down and said no. But now her mom says she feels “betrayed” by her daughter, and Tabatha is wondering if there’s anything she can do to repair their relationship without giving in to her mom’s guilt trip.
Setting financial boundaries with family and friends
About one in five U.S. adults receive financial support from friends or family, according to research from the Consumer Financial Protection Bureau. Meanwhile, another survey found that while lending money to friends and family is a common practice, 27% of Americans who’ve lent money to a loved one in the previous year ended up regretting it.
If a close friend or family member were to ask you for a loan, take a beat and ask yourself a few quick questions. For example, how would this affect your own financial situation both now and in the long term? And if you were to loan them money, what happens if they don’t pay it back?
If you were to use your credit to take out a loan and lend that money to someone who is unable to pay you back, then you’re stuck paying off the loan — after all, it’s under your name. And if you struggle to pay it back, then you could end up damaging your credit in the process. That means, down the road, it could be harder to get approved for a car loan or a mortgage.
In Tabatha’s case, her mom has a history of being irresponsible with money. If her mom is truly unable to pay back her creditors — who could potentially garnish her wages or take her to court — then how would she be able to pay Tabatha back? Tabatha could easily end up enabling her mom’s problematic behavior if she were to lend her mother the money.
A general rule of thumb is that you shouldn’t lend money unless you can afford to lose it. If you can’t afford to lose it, or you don’t trust that the debtor will be able to pay you back, then you may have to make the financially responsible decision to say no. But that isn’t easy, especially if you’re saying no to a family member who has a habit of trying to guilt trip you into doing what they want.
“The key is to be diplomatic in your approach, to be able to handle the situation with empathy while firmly refusing their request,” wrote Pascal Gagnon, a licensed insolvency trustee with Ginsberg Gingras, in a blog post.
If this response isn’t well received and the family member or friend attempts to guilt-trip you, “a satisfactory resolution for both parties is virtually impossible,” Gagnon continues. “It is nevertheless critical to be firm about your position. If you falter at this point, the other person will think nothing of using the same strategy again in the future.”
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How to provide non-monetary help
Fortunately, you can still show you care without giving a family member a loan — and without jeopardizing your financial future.
For example, you could help your loved one find a nonprofit credit counselor or debt-management agency. Working with an impartial third party could help take the emotion out of it and come up with real solutions.
You can also show that you care without a loan by creating a debt repayment plan that helps your loved one over the long run, rather than providing a band-aid solution in the form of a “friends and family” loan.
If a loved one is truly in a dire situation and you want to help, consider a one-time gift — but only if you can afford it, and only if you’re comfortable doing so. If you decide to go this route, be clear that it’s a one-time gift and the amount you’re gifting is all you can afford. For 2025, you can gift up to $19,000 per person — after that, you have to submit a gift tax return to the IRS, which goes toward your lifetime gift tax exclusion.
If you don’t feel comfortable giving cash, you could “gift” a loved one by helping them pay a monthly bill for a specified period of time, or buying an annual bus pass to help cover the loved one’s transportation costs.
Another option is to help them find ways to make extra cash. Perhaps Tabatha could help her mom look for extra work. Or, if her mom has a house, perhaps Tabatha could help her rent out a room for extra money, which she could put directly toward her debt.
While Tabatha is worried about damaging her relationship with her mom, imagine the damage that would be done if her mom is unable or unwilling to repay a loan, putting Tabatha deep in debt. Sometimes saying no is the right thing to do, both financially and emotionally.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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