How to Navigate 4 Tricky Family Money Situations

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I hate awkward moments. I hate them so much that I cringe when people in a movie or a book enter into a situation that I know is going to end up awkwardly.

This loathing of all things awkward means that, for years, I didn't talk to my extended family about money. I didn't indicate to them how my kids and I were doing, when we needed money, when we didn't, and when things they did affected me financially. I just kept quiet. (See also: The Right Thing to Say in 20 Tough Situations)

Recently, though, I had to bite the bullet and have a potentially difficult conversation. Members of my family were demonstrating some attitudes and behaviors that were teaching my children things about money that I didn't agree with, and I needed to ask them to change.

Before I had that conversation, I took some time to think about what I wanted to say, and to research dealing with family and money issues, in general. Here is some of what I learned.

Asking to Borrow Money

Depending on the financial situations of your relatives, there may come a day when you need to ask your nearest and dearest for a loan. If you really don't have another choice (or, at least, a good choice), here are some ideas for making your best case and keeping your relationships intact.

Make Your Case

Be sure you can document your need for the loan.

Keep in Mind Power Dynamics

Borrowing from a relative gives them a certain power over you. Make sure they won't take advantage of that, and that you will be able to live with it.

Have a Plan

Know how much you need, what interest you'd be willing to pay (if they ask), and how you plan to pay the loan back. Be able to talk about these things when you ask for the loan.

Choose Your Time

Don't ask for a loan during stressful moments, or ones that are supposed to be exciting and fun. Instead, schedule a meeting specifically to talk about the loan.

Write Down Your Agreement

Make sure everything is spelled out, so if anyone has questions later, you have a common point of reference. If the lender would like you to sign the agreement, sign it.

Stick to Your Agreement

This goes without saying, but you need to be sure to make your payments on time.

Communicate

If something goes wrong or you have a question, be sure to bring it out into the open. Otherwise, it could damage your relationship.

Talk About Other Things

Be sure that you never let a relationship become just about money.

Asking to Be Paid Back

There may come a time when you are on the other side of the equation and have given a loan to a family member. Whether you came up with an agreement or not, it's easy for people to forget to pay you back, or to let it slide because you are family. However, that money is yours, and you have a right to ask for it back. (See also: Getting Your Money Back Without Losing Your Friendship)

Get Your Details Right

Be sure you know as precisely as possible how much money you lent, when you made the loan, and how much of it is owed you at this point. If you didn't set up any expectations about repayment, decide how much it might be fair to ask for at this point, and be willing to be flexible.

Find a Good Time to Talk

Sometimes you'll need to make your request at a time that is stressful for the other person, but do your best to do it in a way that is comfortable for both of you and not threatening to them.

Don't Butt Into the Details

You may not agree with the way your family member spends money, but don't critique this now. They can spend however they want, as long as they repay your money. If they don't know where the money to repay you will come from and they ask, you might make a couple of suggestions.

Ask Nicely

If you have a particular reason for needing repayment, this will make your request easier to swallow. While you don't have any obligation to make it easier for them, being kind will help keep your relationship.

Write Down a Plan

Whether you have already had a written plan or not, you will need to make a new one here. Be sure to have both parties sign the plan, and get it notarized if you feel like that will help make sure you get repaid.

Put It in Writing

This is usually a last resort. If the person is resistant or continues to not repay you, consider writing them a letter. This gives you a paper trail, in case you decide to pursue repayment with legal action, but it also tells them that you're serious about getting your money back.

Agreeing on Financial Values to Teach Children

This was the situation in which I found myself. My children are the only grandchildren on both sides, and that has meant that they have gotten a lot of gifts, some of which have been extravagant. My kids were starting to expect this from all of our extended family, which led to a difficult situation with a family member who couldn't buy them what they wanted. Whether this is similar to your situation or not, here are some tips for coping when family members have different financial values than you do. (See also: 7 Important Money Lessons Parents Teach Their Kids)

Plan Your Points

Make sure you know what you're going to say and how you want to say it. Try to state your points as objectively as possible, so you do your best to have a rational, focused conversation.

Use an "I" Statement

Or two or three. Basically, you want to talk about what you do value, rather than what your family may not value. This lowers defenses and helps you communicate with compassion.

Don't Give Ultimatums

In my case, it would have been easy to say something like, "If you don't stop teaching our kids these things, you won't get to see them as much." However, statements like that only promote defensiveness. Instead, make it clear that you want to come to a solution that works for everyone.

Decide What You Want

When you have your conversation, ask for your family members to take concrete steps. For instance, I asked my family to keep their gifts for holidays, and instead to focus on doing everyday things with my kids that they will remember. Now, grandma is teaching my daughter how to bake cookies, and she is also teaching my son how to count with legos.

Dealing With Expensive Expectations

It's never easy when you want to spend less on something than your family does. In some families, participation in a large group gift is expected on all occasions, not just for large events like weddings. In other families, there can be expectations of going out to dinner every week or throwing large birthday parties. If you don't have the money to do these things, or you'd just prefer to spend it other places, you'll need to talk with your family.

Come Up With an Alternative

If your family wants you to buy an expensive gift, tell them that you have come up with something that will be deeply meaningful to the recipient, but that you'd prefer to give it yourself. If they like to have expensive meals, offer to cook rather than going out.

Focus on the Relationships

If you have solid relationships with your family members, talking about financial expectations will be less likely to ruffle feathers. If they know you love them and want to be around them, they are less likely to react defensively.

Be Honest

This can take a lot of courage, especially if you need to tell your family members that you don't have enough money for something, or that you have been irresponsible and need to cut back. When you tell the truth, though, your family has more reason to be understanding and help you out, rather than being resentful because you aren't fulfilling their expectations.

When I talked to my family about money, I was terrified. However, their response convinced me that I didn't need to fear talking about money all these years. At first, I could tell they felt defensive because we didn't like the way they'd been acting. By the end of the conversation, though, they felt assured of our love for them and our deep desire for our kids to know them well. We came up with a plan, and haven't had any problems with follow-through so far.

Do you need to talk to your family about money? Let me know how it goes!