Give family money but don’t enable bad decisions

You’ve probably heard the phrase “to whom much is given, much is required.”

But when is the much you’re giving too much?

I received a plea from a single woman who felt guilty because she’s decided to cut off her family from her bank account. As a continuing feature in this column, I’ll tackle questions specifically about your money and your family. If you have a family financial dilemma and you’re not sure what to do, perhaps I can help. Send an email to colorofmoney@washpost.com. In the subject line put “Family Financial Drama.”

For now, let’s look at the woman with a financially needy family.

The background: The woman has been lending money to her parents and a brother. “These family members haven’t lost jobs,” she wrote. “In fact, they have been gainfully employed during the whole (economic) meltdown. There has never been a time when they were not employed. How many people can say that?”

She’s tried to talk to her family members about getting credit counseling, but they haven’t been receptive to the advice.

The conflict: The brother and parents spend more than they earn.

“They were so sloppy. They had no clue when I asked them what their total outlays were, where the monthly money was going, or even what their credit card total debt was.”

The woman asked her brother and parents to produce a budget she could examine. “With the brother, he did humor me through the exercise of writing out all monthly outlays (not a budget mind you, a snapshot). I gave him pointers of what must go.”

One was his “gas-guzzling” leased car. She suggested the brother purchase a used, fuel-efficient vehicle at the end of the lease. He did buy a smaller car. However, he also bought the gas-guzzler after the lease was up. “The point of the exercise was to dump the leased car and drive the cheap miser for a few years.”

Then there are her parents, who by the woman’s estimate spend 10 percent to 20 percent more than they earn each year. They make up for their shortfall by using credit cards and pulling equity out of their home. “Well, the house equity is tapped out, their credit card balances are high, and now they need money for house repairs,” she wrote. “Honestly, I think they are close to insolvent, but my dad refuses to do anything about it.”

Her father wasn’t open to any budget changes. He wanted her money minus the commentary, she said. “He said if I lent him money, I had no right to tell him how to spend it.”

The dilemma: Her brother only half-listens to her budget advice. Her parents refuse to give her the details of their financial situation. She says she’s done bankrolling their bad behavior.

“I’m not lending to any of them,” she said. “I know I’m right, but I feel bad because I have a very good job and could afford it. I feel like the bad gal, but I’m the only one with a level head on my shoulders.”

So how can she assuage the guilt she feels about turning her back monetarily on her parents and brother?

The bottom line: There are two issues in this family financial drama — irresponsible relatives and a condescending but well-meaning benefactor. I’ll address the latter first.

If you’re going to bail out relatives, don’t belittle them, assume the role of a parent, or worse, allow them to continue their bad money management by rescuing them on a regular basis. This woman was guilty of all three behaviors.

If you decide to give money to relatives (never lend money to family or friends) and you have better budgeting skills than they do, then I think it’s OK to make the gift contingent on the person demonstrating that he or she won’t waste your money.

But don’t treat grown folks like children. They don’t have to take your recommendations. If they choose not to show you a budget, share their financial challenges or seek professional help, then tell them you can’t help. And mean it. If you give them money even grudgingly, you are part of the problem because they won’t change. They won’t learn to budget. Why should they? You keep bailing them out.

When you’ve decided to stop being an enabler, then walk away, but not out of a feeling that you’re financially superior but because the family members you want to help aren’t willing to do the work it takes to become better money managers. If you do this, then you don’t have to feel guilty.

Michelle Singletary: singletarym@washpost.com.

Washington Post Writers Group