I am sure some people reach out to you for financial help every now and then. Some do this rarely, while others are more frequent in making the request. Let’s focus on those who are quite regular in asking for help.
Helping others is great. And I am sure most of us do it, too. But it is possible that, over a period of time, your helpful attitude is making others believe that they can take your help for granted. They treat you as their own source of emergency funds. That is simply not right. It burdens you as well as makes them irresponsible towards their own finances.
You also need to ensure that those around you start managing their finances in a better manner, so that they become self-sufficient.
Unburdening yourself from being a lending source for others is all the more important if your finances are not great either. You may genuinely want to help, but doing that might mean tilting your financial boat a little too much.
Tough times highlight gaps in personal finance
I will share my personal experience here. During last year’s lockdown, quite a few relatives reached out to me for help. And I did what I could. But what caught my attention was that so many people live on the edge when it comes to their finances. They are caught neck-deep in EMIs, expenses and have almost no buffer for emergencies. And these relatives of mine aren’t poor exactly. Living pay-cheque to pay-cheque, or not having any financial flexibility is what really got highlighted during the last year or two.
I know people have different views about helping/lending money to relatives and friends. But most often than not, if these people ask for financial help for serious scenarios such as medical expenses, job loss, etc., then you really can’t say no to them.
Not just because you are a good person but also because you wouldn’t want to come across as a greedy evil person who just wants to hoard money!
But jokes apart, everyone really must have an emergency fund (no matter how small) first. And if you are a person on whom many close relatives depend on, then it is your responsibility to educate these people to gradually build their emergency fund. This will help them. It will also help you. I know all this looks like unnecessary work and too far-fetched a thought. But if you are someone who can relate to this, then you will know how important it can be to have people around you become self-sufficient over time.
It’s not just about emergency fund
There is another angle to all this. It’s a good idea to get people around you to have their own savings for rainy days. But that is not sufficient at all. You also need to push them to buy themselves proper health insurance and term life insurance (and not traditional insurance plans).
I am sure you have got the message about why I am saying this.
Here are two scenarios for you to think of.
-First, imagine this close relative getting hospitalized without proper health insurance and emergency fund. Chances are, you will end up spending money on them.
-Second, imagine the worst-case scenario. God forbid, but assume this relative was the sole earning member of his family and dies without sufficient life insurance! If you are really close to them, then it’s possible that gradually, you will have to take care of his family’s finances to some extent. This is something I can relate to. A close relative was the sole-earner and expired suddenly with life insurance a few years back. We, along with a couple of other families, are now supporting this relative’s dependents. I hope you got the right message here.
You need to educate others around you to help themselves too. This will help reduce future liabilities for you.
What must you do next?
-Make a list of people to whom you cannot say no if they ask for help.
-Figure out whom amongst these are financially vulnerable from an emergency fund and insurance perspective.
-Gradually try to make them understand why having an emergency fund and proper health and life insurance is so very important.
-This will never be an easy discussion. But that’s how it is. For their and your own good, you need to have these uncomfortable conversations.
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