I probably shouldn’t be too surprised.
We’re social animals after all. It’s only natural that our survival instincts drive us to google cures for loneliness and cures for the pandemic in the same browser session.
If my Whatsapp notifications are any indication, there’s been a worldwide surge in digital communications.
People are texting more, FaceTiming more, and sliding into DMs more.
And I can’t seem to get enough of articles about strangers finding increasingly creative ways to use Zoom.
Regretfully, not all online interactions are fun and games.
For those tittering close to the edge of financial ruins, COVID-19 is a matter of life and death in more ways than one.
For those tittering close to the edge of financial instability, #COVID19 is a matter of life and death in more ways than one.
(The state of the economy is so sorry I ran out of novel ways to describe it.)
As bills pile up and the fridge empties out, one of people’s last resorts might be to seek the help of friends, family, acquaintances, colleagues – you.
You’re eager to lend a helping hand, and that’s commendable.
But before firing up your Venmo, ask yourself the following questions to make sure that you’re making the right decision for everyone involved.
1. “Can I afford to help?”
This should be the first question to consider.
If you can’t afford to help, nothing else matters.
In today’s economy, few of us enjoy the luxury of sitting on piles of cash. So if you’re in any way worried about your family’s finances, it would not be wise to bail out others.
Put your own oxygen mask on first.
2. “How close are we?”
Even if you have the financial bandwidth to bail others out, you have a finite amount of money. (If not, hello Bezos! Fancy seeing you here.)
That means you cannot afford to help everyone who asks, at least not to the same degree, so you need to prioritize.
Those who’re the closest to you should get the first dibs:
- Your parents
- Your children
- Your partner (if you haven’t joined finances)
- Your siblings
- Long-time friends who were there for you
For everyone else you’re on friendly terms with, do what you can without stretching your budget. There’s also nothing wrong with determining how much you’re willing to help based on how close you are with a person.
For example, you could treat a struggling coworker to the occasional lunch, or pay for an Uber ride from time to time, but you’re well within your rights to draw the line somewhere (mine is anything above $50).
Similarly, you’re probably happy to gift $1 to a street musician, but would never consider dropping a one hundred dollar bill in their guitar case.
But if the person demanding money only comes out of the woodwork when they need something and then disappears the minute you speak up about your own struggles, even $1 is probably too much to give.
3. “Do they actually need the help?”
Is the money they ask for is intended to meet a desperate need, or satisfy a frivolous want, or something in between?
Yes, the source and severity of their financial distress matter.
A brother who wants $500 to buy the latest PlayStation takes a backseat to a friend who needs the same $500 to pay rent, no matter how much more you love your brother.
Your spare dollars should go towards those who need it the most, all things considered.
4. “Will they be able to pay me back in the future?”
The answer to this question may have the largest influence over your decision to help someone out or not.
Lending money to a trustworthy relative who hit a rough patch but has the wherewithal to pay you back within a reasonable time frame will likely not impact your net worth in any significant way. If anything, those borrowed dollars could earn you interest in goodwill with this relative.
Lending money to someone who may never have the means to pay you back is a completely different experience.
It doesn’t mean that they don’t deserve your help at all. You just need to fine tune your expectations accordingly. Instead of lending them money, just give it as a small gift.
Remember to gift no more than what you’re comfortable never seeing again, because you may not.
5. “Will bailing them out negatively affect our relationship?”
As the old adage goes, you should never mix money and relationships.
When money exchanges hands, people on both sides catch feelings.
The person who borrows money might be thinking:
- They could afford to lend me more, look at the new car they bought!
- They know I have a tight budget, I can’t believe they keep pressuring me to pay them back.
- I’m so jealous that they have money. It’s not fair. I deserve to be rich too.
- I feel so ashamed. They must think I’m awful with money.
The person who lends money might be thinking:
- They don’t seem appreciative enough.
- I feel taken advantage of.
- Why can’t they get their act together and stop asking to borrow money all the time?
- I doubt they’ll do the same for me.
- I can’t believe they just posted those vacation photos on Facebook! They could’ve used that money to pay me back.
As resentment brews, lifelong friendships and familial ties could get tainted, or even shattered.
So before bailing someone out, be aware that you might be stepping into a minefield of potential drama fit for a HBO show.
6. “Am I enabling them?”
Providing financial relief to someone who had a setback in life helps them get back on track more quickly.
But if someone consistently makes terrible financial decisions, and expects others to bail them out time and time again, helping them could snowball into a larger problem.
If someone has a pattern of squandering money foolishly, the kind thing to do might be to not bail them out, at least until they stand on their own feet.
As long as others are willing to enable their bad behaviors, they never have to face the consequences of their decisions and actions, and have no real motivation or need to ever improve their own finances.
Sure, it’s hard to say no to someone who struggles, but know that you’re doing the right thing in redirecting their path towards a more financially independent life.
7. “Is there another way to help?”
If you’re strapped, or don’t find it appropriate to offer financial help, it’s perfectly okay to support people in ways that don’t involve handing over a stack of Benjamins.
- If someone can’t afford groceries, bring over a week’s worth of freezer-friendly meals
- If someone just lost their job, connect them with opportunities in your network
- If someone’s car broke down, offer to drive them around during the weekends
As long as the solution is temporary and feasible, it’s all good. You wouldn’t want to overextend yourself either.
Onward and Forward
In a perfect world, no one would ever find themself in dire need of financial aid.
But our world is nothing if not full of nuance. The answer to the question “should I help that person out financially” isn’t as clear cut as we would prefer.
Hopefully these 7 questions will help you assess whether bailing someone out is a good idea.