3 Healthy Financial Boundaries To Set With Your Family, According to Rachel Cruze

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It can be hard to talk about money, even with those closest to you. But it’s important to set financial boundaries with your family to protect your own security.

“Family is one of those things in life that it is a gift, and in order to have that gift be a gift that keeps on giving, we want to make sure that things are in line, and boundaries possibly have to be set,” said money expert Rachel Cruze in a recent YouTube video.

“I think the older we get, when it comes to your parents specifically and maybe your adult siblings, there are times that you have to create boundaries.”

Cruze said that when it comes to setting financial boundaries with your family, there are three rules to keep in mind.

Don’t Borrow Money From Family Members

Cruze notes that owing money to anyone is always stressful, but it can get particularly complicated when family members are involved.

“The idea of debt in general is something that is really difficult and a big stressor on people’s lives,” she said. “When you owe hundreds or thousands of dollars of debt every single month, that’s income that you could be using to spend, to give, to save, to do whatever you want with it.”

Because getting family involved in your debt can only compound this stress, Cruze said to avoid doing it.

“Do not borrow from your family — period,” she said. “It’s just never a good idea because we always see that the relationship suddenly changes when you borrow money from an in-law, from a sibling, from a parent.

“When you owe them money, and you have holidays together, and maybe you’re spending money on Christmas gifts or airline tickets to go somewhere with your family, when you owe someone money, usually they’re looking and being like, ‘OK, well that’s nice you did that but you still owe us money.'”

Situations like this can put a major strain on the relationship or even ruin it completely.

“We have heard countless stories of this going sideways, so it’s usually just a pretty clear rule — just don’t borrow money from family,” Cruze said.

Don’t Lend Money to Family Members

Cruze said that in addition to not borrowing money from family members, you also shouldn’t lend money to family members.

“If you are the one that’s being asked, ‘Hey, can we borrow X, Y and Z?,’ I would say no,” Cruze said. “Again, it’s going to change the relationship there. It’s not worth the relationship complications that come with it.”

Cruze said the only time you should “lend” money to a family member is if you don’t expect to get that money back and are able to give it as a gift. However, you should only do this if you are in strong financial standing and don’t need the money for your own security.

Don’t Cosign Any Loans

As much as you may want to help a family member out, you should avoid cosigning any loans they want to take out.

“When someone needs you to cosign a loan, that means the bank does not trust that person that’s taking out the loan,” Cruze said. “[Well-meaning] and good-hearted people, will be like, ‘Oh sure, I will help you out and cosign.’ Well, if the bank can’t even trust someone when it comes to their debt, the conclusion is going to be that you’re going to end up with the loan.

“We see this time and time again — the person who needed the cosigning, they don’t have the ability to pay for whatever reason,” she continued. “Then you now owe the money as the cosigner. So what you thought was a good thing ends up really harming you in the process.”

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