4 tips to keep your financial plan on track when supporting loved ones financially

Estimated reading time: 6-7 minutes

When it comes to your money, knowing your limits is essential.

This is where the financial planning process can be so valuable. It allows you to take a deeper look at your financial situation, with clear steps to get you from where you are now to where you want to go. But, for many, supporting loved ones financially can derail even the most well-laid financial plan.

Whether it’s your children, your parents, your siblings or even your friends, there may come a time when you want or need to help them.

But, when supporting loved ones financially, it’s essential to avoid derailing your financial plan. It’s not always easy to do, and it may require saying no in some situations, but it’s worth the effort. Because ultimately, if you derail your financial plan to support your loved ones, you perpetuate the cycle and one day you may ask your loved ones for support.

Instead, here are four tips for supporting your loved ones financially while keeping your financial plan on track.

First, know where you stand financially.

The first step when deciding to support your loved ones financially is to know where you stand.

Often this involves a detailed review of your financial statements, from cash flow to net worth and everything in between. But, more importantly, understanding how you are progressing towards your financial goals is essential.

  • Are you on the right track to a secure retirement?
  • Will you be able to live the lifestyle you are aiming for?
  • Are you able to help?

By answering these questions and reviewing your financial situation, you will begin to clearly understand if you are in a position to help.

Because at the end of the day, supporting loved ones financially is a bit like safety training before takeoff: you have to put on your oxygen mask first before helping others.

Second, determine what you are willing to provide.

After reviewing your financial situation and understanding your position, you can determine what you are willing to provide.

There are a few things to consider here. First of all, just because you can help your loved ones doesn’t mean you have to. And, you don’t have to offer everything extra. It’s up to you what you’re willing to provide.

And, if you’re married, it’s also essential to consider your spouse’s perspective.

Often spouses can disagree about how much help they can offer their loved ones. This can cause a rift in the relationship, creating a misalignment of financial goals, hopes, and dreams.

Instead, do your best to be on the same page as your spouse. Understand that you both have different experiences and behaviors when it comes to money, but work together to come to an agreement that makes you feel heard and understood. Often, this is where a financial planning professional can be invaluable.

An experienced financial planner can help you navigate the conversation with your spouse, giving you both confidence that your financial plan will remain intact while making a decision that works for you and your partner.

Third, communicate clearly and set boundaries with loved ones.

Once you’ve decided what you want to give, it’s time to communicate it to your loved ones.

In many families and cultures, talking about money is considered taboo. But, when providing financial support to your loved ones, it is essential to communicate clearly and openly. This will help avoid any surprises or misaligned expectations.

Here are some points to discuss when providing financial support:

  • Make sure your loved one understands whether the support is one-time or ongoing.
  • Discuss whether you expect them to refund you or not. In other words, is it a financial gift or a loan?
  • Make sure they understand that you and your spouse are in agreement to avoid feelings of shame or guilt around your partner.
  • Discuss if you will be able to help them again in the future. They may need it, maybe not, but if you don’t discuss the future, they may turn to you again when needed.

Finally, remember that conversations about money can be tricky and complex.

But, if you approach the conversation with a genuine desire to listen and be heard, things should go well. And ultimately, remember that your goal is to keep your financial plan on track while keeping your relationships healthy and intact.

Fourth, stick to your plan – exceptions should be rare.

Finally, stick to your plan – exceptions should be rare.

When you support loved ones, something is almost guaranteed to change or happen. Because ultimately, if your loved one finds themselves in a situation where they need your support, they may find themselves in that situation again. But, once you’ve figured out how much you can help and communicated it clearly, it may be best to stick with your plan.

By sticking to your plan, you communicate to your loved ones that you are there for them, but that they also need to provide for them.

This can save you from a situation where you offer chronic financial support, often at the expense of your financial plan.

But be open to changing circumstances and avoid becoming too rigid. Remember that when someone is unlucky and needs help, they are in a vulnerable state. Even small life changes can push them into a position where they need extra help, so be sensitive to that possibility.

The goal should be to strike a healthy balance between sticking to your plan and being open to change.

Finally, remember that there is a difference between helping someone and enabling someone. Do not activate. However, there are a host of possible circumstances where stepping in and offering love and help, even financial help, is the right thing to do. If you find yourself inclined to help and it doesn’t help the person, then help. It will be an experience you won’t forget, and the recipient won’t either. Don’t miss these opportunities if you can afford to help.

Ultimately, one of the best ways to determine how much you can afford to help your loved ones while keeping your financial plan on track is to consult with a trusted financial professional. They will be able to look at your entire balance sheet and help you determine what makes sense.

TrueNorth Wealth is here to help.

If you are interested in working with a CFP® fiduciary professional to help define your unique investment plan, with an investment portfolio customized to meet your financial goals, then TrueNorth Wealth is here to help.

TrueNorth Wealth is a top wealth management firm in Utah and Idaho, with offices in Salt Lake City, Logan, St. George and Boise. At TrueNorth Wealth, we strive to help our clients build long-term wealth while maximizing their enjoyment of their money. We do this by pairing our clients with a dedicated CFP® professional supported by an incredible team.

For our team at TrueNorth, it’s about more than money. It’s about serving families across Utah and helping them achieve freedom and flexibility in their lives. To learn more or schedule a free consultation, visit our website at TrueNorth Wealth or call (801) 316-1875.

The information provided in this article is opinion and not professional advice. To take charge of your own finances, please consult a licensed financial advisor.

Joe Griffin, CEO, TrueNorth Wealth

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