Ok, not just advice. My aunt asked me to take over her finances. And she’s not old. Or disabled.
They’re just in over their heads.
Now, my family does not know that I have a blog that lays out every detail of my financial life. The Big Guy knows, but no one else. They know that I write – and that it has something to do with a blog – but I have conveniently led them to believe that all I do is freelance writing. I mean, wouldn’t it be awkward if my family read my blog and knew every detail of my financial life?
But back to my question. What do you do when a relative asks you to take over their finances?
So, we’re sitting in her living room, talking about Baby RB40 and making the switch to one income, so The Big Guy can stay home with her. We start talking about some of the switches we’ve made to make it happen, like budget changes, paying off debt on one income, and cutting expenses. We talked about how we made the switch to Republic Wireless (and we love it), and how we sold one of the cars to get our from underneath the payment. We also talked about eMeals, and how even though the subscription costs money, it actually saves us money because we buy much healthier food, and don’t impulse shop as much.
My aunt and uncle have been living paycheck to paycheck for years. Even though we haven’t really talked about it, it has become increasingly obvious to me. They started off working one job each, but then my aunt started babysitting on the side for some extra money. Then, my uncle picked up another job, and then a lawn mowing side business. In the midst of it all, they’re buying new vehicles, expensive electronics, and vacations. They’re awesome at side-hustles, not so awesome at managing the money they make from them.
Now, I’m not judging, because their choices are their own, and they’re the ones who have to answer for them. Plus, my financial choices have been far from perfect. But when you aunt confesses that they are in chest deep in credit card debt, have more auto loan debt than they can handle, and are still paying on student loans, it’s tough. Then, its made tougher when she tells me that she allows herself $20 a week to spend on candy crush so she can have more “lives” in the game.
So, what do you do when a family member asks you to take over their finances? Obviously, I’m not going to, but what could I do to help her out?
Are there strategies I could use to gently push some cost-cutting measures on them? Or is there a way that I could get them to see their need to make a drastic change and pay off debt like madmen until at least their credit card debt is gone?
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The good news is that your aunt recognizes there is a financial problem and is seeking out help. :) Would it be possible to mentor them? Perhaps suggest having them write down all of their expenses for a month. Most of the time that is a huge eye opener when you realize you spend $500 on restaurants or $100 on coffee, or whatever his/her vice is currently. Or suggest whatever has helped you. Best wishes! :D
Yeah, what is it that they say? Recognizing you have a problem is half the battle? I think having them write down every expense for a month will be the first step. It’s the logical next choice :-)
Oh, I would love to take over several of my family member’s finances. They would be a lot better off. If not take over completely, I could at least tell them exactly what to do. I’m bossy like that.
Haha…I love it! However, I still want them to like me :-)
I’ve thought about what I’d do in this situation, and I would wonder how serious they really are. Would they be willing to actually change things that they’re doing/buying? Would they be willing to sell stuff if you told them that that’s what it would take?
You might gauge how serious they are about you taking over by offering to do it for a fee. Perhaps arrange a fee of X% of what you save them?
Otherwise, just offer advice on questions they ask and maybe refer them to someone like Dave Ramsey or suggest they read Your Money or Your Life.
Interesting idea! I’m not quite sure I have to balls to bring up a % fee to them, but if I’m feeling rather feisty i guess we’ll see…
I think you were right to say no, because family relationships get strained in those situations. However, suggesting books, programs, and other materials is the best way to go. If they are too cash strapped, let them borrow your copies (if you aren’t using them anymore) or suggest the library .
Best of luck. We are dreading taking over my father’s finances. Let us know what you do.
I’m hoping it was the right decision. I started by suggesting Republic Wireless to lower their cell phone bill. They made the switch and have been really happy with it. Maybe now I’ll suggest another product or service that helped me! thanks for the advice!
I think you’re right not to actually do it for them. I don’t think they can be that serious about it if they are budgeting in $20 a month for phone games. Sadly I don’t think they will be serious about it until far beyond the point where it’s still easily manageable.
It might take a wake up call like someone losing a job to realize they have to cut expenses. If people aren’t willing to cut expenses then they won’t take things seriously. It would be like going to a personal trainer and sneaking doughnuts when they aren’t looking. They like the idea of getting out of debt but aren’t ready to give anything up yet for it. They sound like they are the kind of people that need instant results to see that what they are doing is worthwhile, but there aren’t really any short cuts in personal finance.
Possibly they just need the right visualizations to make it work, paying for lives on candy crush doesn’t require them to actually take a $20 bill out and give it to someone, they just click a button and it’s done. For me, with these types of things I use the stranger test. I imagine a stranger holding out $20 or extra lives in a game. Maybe if they visualize their money or their purchases they will consider the money more.
It sounds like the big stuff is the killer though, new cars, etc. But maybe if they can cut back on some of the smaller crap first they can figure out the big stuff later… maybe.
Good luck, whatever happens.
I think you’re totally right, and that’s what makes it so hard!
You know, initially I thought “no way” when I read what they asked of you. Then I thought, ABSOLUTELY!!! For ONE MONTH.
I think if you sat down and made them a budget, gave them an allowance and then at the end of the month showed them how much you saved and how it worked, then YOU have the potential to change THEIR lives and even better, they ASKED for the help!
As a person who is easily overwhelmed, maybe they just need a little push and to see that there IS HOPE. You could give them stipulations like the following:
1) You must sit down for a monthly budget meeting with me
2) You must turn over all credit cards to me until you have met your goals
3) You must give me access to look at your accounts
You could also give them “treat” months for managing their money well. I also think a NO Spend Month would be the perfect baptism by fire month for them. If you can show them how much money they are throwing away, it might just wake them up enough to really change!
P.S. As a side note, I think some people need to lay off about the Candy Crush comments. Yes, $20.00 for a game when you’re broke might seem like a lot of money, but if that is ALL she spends in the month for entertainment, is it really so horrible? Is it any worse than a subscription to an online game, Netflix, Amazon Prime, Hulu, or any of the other things we use to keep ourselves amused?
That’s an amazing idea! That way you can give them a taste, but not forever. Anyone can be the bad guy for a month, can’t they? But, still not sure if I would chicken out…..
I don’t think I’d be comfortable taking over a family member’s finances, but we have done a fair amount of what we call “friendly advising.” Our family and friends know we’re obsessed with personal finance and they’ll pose specific questions from time to time. And some of my husband’s colleagues have opened up their finances to him for his advice, which he’s happy to give, but he doesn’t assume total responsibility for their plans. I think that’s where I’d draw the line–happy to offer advice when solicited, but don’t want to be “responsible” for someone else’s financial decisions. One thing I notice is that, even though people ask us for advice, they always get defensive when we encourage them to reduce spending (“but I HAVE to color my hair twice a month and buy my lunch out every day”) that’s when we just smile and change the topic… I try to offer tips and strategies for frugalizing, but it’s ultimately up to them to change their mindset and approach to life. I wonder how your aunt and uncle react to your advice?
I think I’m going to try friendly advising as well, although that’s a different way of putting it. Every now and then, I’ll introduce them to a new service or product that totally changed my financial lives. I’ll show them how it works, and hopefully it will help them too!
I think in this case, one of the best things you could do is give your aunt your honest opinion when you have these conversations about money. When she says she has a $20 candy crush allowance, ask her if that $20 would be better spent cutting into high interest debt. I know, it can be rough to have these conversations…I actually had one with my “brother, business partner, best friend” whatever you want to call him. Anyway, he was blowing through money like crazy. One day he talked to me about it and I told him “Bro, you’re a smart man, but you’re completely ignorant when it comes to your money.” We talked about what he wanted to do and what he would have to do to get there. Now, he’s making the big move 4 months later with a few grand in his pocket for the ride. I never took over his finances, but when we had our talks, I held no punches either!
You’re probably right, but it’s so hard! I’m afraid I might chicken out…
I would give them tools and encouragement to get where you are at with your finances, nothing pushy, maybe your budget spreadsheet or a few tips to cut costs. Ultimately they are on their own.
That’s good advice – thanks!
I would have said “no” as well… but when people get curious about the stuff we do, I point them to the different tools we use – like using mint to coordinate our spending with one another and stuff like that. I’ll pull it out on my phone and show them some basics and offer help if they want to set it up or have any questions. That’s a big first step for most people.
Mr PoP is a little less subtle about it, telling folks who have questions that they need to read Your Money Or Your Life. =/
Haha! Sometimes I wish I was more like Mr. PoP, but I think your route of showing them Mint.com is probably better :-)
First and foremost, I’d certainly tell them no. 1. It’s time consuming and you don’t need to do it for free. 2. It’s too personal. Each person needs to decide on their own financial priorities. 3. If someone else does it for them, they won’t learn.
If you’re anything like me, though, you feel like you have to at least try to help them. In order to avoid being bossy or naggy, I’m a fan of just writing it all down once and delivering it to them and saying, “Do whatever you want with this information.” (And meaning it.) Include some resources, some of the things you’ve read that were the most impactful, tools you use, blogs you read (but then you have to understand that they could eventually happen on to your blog…), ways you stay motivated, etc. Also suggest that they check with their employers to see if their employers have employee assistance programs and if so if they have financial counseling as an available service. Or maybe they can join a credit union that has free financial advising. I would include some of my own advice and a reminder that they should do whatever is right for them. I think people sometimes see finance like dieting where it’s one extreme or the other. It is okay to fall somewhere in the middle.
And then, you have to be prepared for them to change absolutely nothing. I have an acquaintance who is insanely bad with money. I have tried many tactics.
Telling him what tools I use (Goodbudget, EEBA at the time)
When he’s talking about a crazy expenditure, “Oh, that’s just not in our budget.”
Mentioning ways we save money
Talking up the wonders of discount stores like TJ Maxx or Burlington for kids’ dressy clothes
“You are taking money out of your RETIREMENT to pay for her COLLEGE?!?! There are LOANS for college. There’s nothing for retirement!!! Holy crap! Don’t do that!” (I couldn’t help it, I was shocked and horrified and it tumbled out of my mouth.)
In regards to his youngest, “He wants your time. He doesn’t need more things. Tell him no. Stop going to Toys ‘R’ Us.”
He has done none of these things. That kid has more toys than he can ever play with. They buy children’s clothes at Nordstrom. It’s painful to watch. Now when he’s telling another tale of woe, I just shake my head. I know that I have done my human duty and tried but that his family’s finances are not my responsibility.
Whoa! Children’s clothes at Nordstrom? That’s crazy! But, you’re absolutely right that it would take WAAAY too much time and then they probably wouldn’t change anyway
I’m not sure I would want to know the exact amount of money and debt a relative or good friend has. It’s so intimate, and I’m so judgmental (what are you thinking buying a new laptop for your 12 year old granddaughter when you only have enough gas to get to work and back for the week and your “emergency money” in your wallet consists of a $5 bill?) When my maiden aunt (80+), who was a spendthrift and hoarder, asked me to take care of her legal, medical, and financial issues, I was humbled that she asked but also shocked about how she had spent her money and the debt she had accumulated. I was able to get her affairs in order before she went to a board & care and I did her taxes and wrote out her monthly checks so she didn’t have to worry about forgetting to deposit her retirement check and have her checks bounce. She later developed dementia, so it was good that we got everything in place while she was still legally competent.
My husband and I are frugal . . . in April we paid off our house in 21.5 years; our daughter will be a senior at a private college and we have been able to help her with tuition without her having to borrow any money. We don’t have a TV nor do we text. We never buy new vehicles; we pay cash for certified used ones and drive them for 10+ years and never scrimp on doing regular maintenance. Over the course of our marriage, we have been able to gift four cars to people who needed reliable transportation.
We had our daughter open a checking account when she was 16 and we deposited a monthly allowance that she used to pay for all her clothes, music lessons, entertainment, and other expenses. It taught her a lot, including the time value of money; with our blessing, she used her wages from her summer job to open a Roth IRA when she was 21.
We tithe and save 15% of our income. The trick is living below your means and being content with what you have, not what you want. Wanting what everyone else has instead of what you need is a recipe for disaster. I think for your aunt, all you can do is show her by example and make suggestions on how to economize when asked. You can lead a horse to water, but you can’t make it drink.
When I was a legal aid attorney, I’d sometimes be too paternalistic and think “that person should turn over his finances to me and I’d pay all the bills and give him an allowance with whatever is left.” When I was on the Habitat for Humanity board of directors, we had each family take a class on family finances. One single mom had about $5 after all her basic expenses were paid and it was hard for her to understand that cable TV is not a necessity.
I recently had to have “the talk” with my mom about finances. I’ll save all the boring details cause it can make up an entire post in itself. I will say, the end result is her starting her very first emergency fund. She will direct deposit into an account that I set up for her — an online bank that she will not have easy access to. Its a small step, but a step in the right direction.
Maybe you can set goals for your aunt. Start small…so she can get a couple wins under her belt and go from there. If she is serious….she will do what you ask…or at least make an attempt. It could be a great opportunity to positively impact her life.
That’s really tough having to have the conversation with your mom, but I do like the concept behind setting small goals. Who knows, maybe it will work for my aunt!
Thanks for linking up with the Parenting Pin it Party this week x x
I have done this and it had helped 3 people. They all got an allowance each week until they were out of debt. They learmed to be more careful, new ways to stretch out the money and more creative (one friend agreed to be the DD one night and in return the friends paid for her soda that might or drinks the next time they went out). There has to be rules in place for it to work, I knew there may ne a couple of slips along the way or unexpected costs. However, these people mostly needed the confidence to know it could be done on their monthly budget, the debt stress was too much for them to believe it could be done and even saving some $ along the way. These people learned that when “extra” $ came in, they didn’t get any of it…until they began paying their own bills again. They may still not be the absolute best at money management, but they gained confidence that they do earn enough each month, and still use some variation of the system.