There are a few things that can put a strain on relationships. One of the biggest is having family financial problems. It’s common for money issues to be present at some point in your family's life, whether it’s a job loss, unexpected medical bills, or just not earning enough to pay the bills.
Is your immediate family in financial trouble? Or perhaps an extended family member having a financial hardship?
If so, there are some steps you can take to help navigate the situation and hopefully do your best to get back on your feet or help someone else if you can.
So let's dive into what family financial problems are, what causes them, and how you can navigate them! Plus, we have tips on how to help out other family members too.
What are family financial problems?
When you or someone in your family faces financial difficulty, it can have an impact on the whole family and even extended family members.
A family financial problem is when someone in the family has financial challenges that make it difficult for the whole family to get the things they need, such as paying rent, buying groceries, and saving for retirement.
Financial problems in families can happen as a result of many factors, including hardships caused by a broader economic downturn.
For instance, an economic recession can dramatically impact families, causing people to lose their jobs, cars, homes, retirement accounts, savings, and more.
What causes financial problems in families?
There are many obstacles that families face when they have financial issues. While family financial problems can be caused by outside forces, such as an economic recession, it can also be due to a lack of money management skills.
Here are some of the most common issues that can cause financial hardship in families:
The average debt balance of Americans is at almost six figures. From credit card debt to student loans, debt can be crippling. It may seem like every extra penny is being put towards your loans, yet they aren’t decreasing fast enough.
This is especially true if you or a family member has high-interest rate debt, like credit cards.
Not to mention the financial burden of not having any money and having to use up the family savings account to pay the bills.
Health care costs
Another obstacle that can cause family financial problems is medical bills. While healthcare costs vary by state, insurance can cost an average of $400 or more a month.
And if a family member gets ill and doesn’t have health insurance, the costs can be astronomical.
Lack of money
Sometimes no matter how many jobs you seem to work, you just don’t have enough money. This can be because you aren’t earning enough or simply can’t manage your expenses and are living above your means.
Whatever the case may be, a lack of money can cause many family financial problems! Explore more about the causes of financial problems here.
7 Ways to navigate family financial problems
Facing financial problems in families can be difficult. Perhaps you and your spouse are having problems due to finances. Or the kids don't understand why you can't afford to take a trip or purchase an item they really want.
Whatever the reason is you are having family financial problems, the good news is there are ways you can improve your finances! Try these top seven ways to help you navigate financial problems:
1. Have a financial family discussion
Sit down as a family and discuss the financial problems you are facing. It's not always easy having money talks, but it's essential that you and your family are on board with what needs to take place to get back on track.
You can brainstorm together ways to save more money or make a game out of it, so it's more fun for the kids.
Although this is a stressful time, you can still make it an enjoyable discussion. Make some dessert and have a family game night afterward so you can bond and destress.
2. Get frugal
The next step to help you navigate family financial problems is to learn to be more frugal. You'd be surprised at just how much money you can save by learning how to be a savvy shopper and find ways to cut your budget.
For instance, you can save quite a bit on your grocery bill just by couponing and buying generic brands. You can also shop thrift stores for clothing, find fun free things to do instead of going out, and slash your cable for simple ways to save.
Finding ways to be frugal can be very helpful if you are suffering financially.
2. Create a budget
The easiest way to navigate current and future family financial problems is to always have a budget. Budgeting lets you know how much you have coming in and going out.
You can see if you are making enough to cover your basic living needs as well. It puts everything in perspective for you.
The key is to find a budgeting method you find easy to stick to. Finding a budget that is easy for you to follow can prevent future budgeting challenges!
3. Boost your income
The fastest way to help your family's financial problems is to boost your income. You can start a side hustle, find a part-time job, or even ask for a raise at work if you are due one.
A side hustle can be one of the best ways to boost your income because it can bring in hundreds to thousands of dollars a month. Some high-paying side hustles are freelance writing, virtual assisting, and wedding photography.
Be sure to find something you enjoy doing so you don't get burnt out.
4. Price compare everything
It's too easy to just pay for something and forget about it. However, you can save a ton of money by comparing the prices of everything from insurance to prescriptions.
For instance, let's say your car insurance is $150 a month, you may be able to get a lower premium simply by calling around and getting quotes from competitors. If you could lower your bill by $50 a month, that's a yearly savings of $600!
So be sure to price compare anything you buy or services you are using so you can keep more money in your pockets!
5. Call your creditors
If you are facing severe family financial problems then reach out to your creditors to work out an affordable payment plan. This can prevent bills from going into collections and let your creditors know you are trying your best to pay the debt.
This is very important if you are having trouble paying your mortgage. In some cases, lenders may offer a temporary solution such as mortgage forbearance to give you time to get back on your feet.
Whether it's your medical bills or utilities, be sure to reach out and get some assistance.
6. Find programs and resources to help
After you contact your creditors, you may still find yourself with family financial problems that are just too much to handle. If so, then look into programs and resources that can help you. For instance, rental assistance or welfare services like food stamps.
There are many local, state, and federal programs that can help you through this difficult time.
7. Build an emergency fund
The key to avoiding family financial problems in the future is to build up an emergency fund. This fund is for unexpected events and expenses. For example, if you're car breaks down, or you lose your job.
Having emergency cash will prevent you from racking up debt to cover life's unexpected hiccups. A good goal is 3 to 6 months of living expenses. But you can start with a goal of $1,000 and go from there.
Now that we covered what to do for your immediate family's financial problems, let's dive into how you can help out a family member if they need help.
5 Ways to help out an extended family member with financial problems
Perhaps you have your financial house in order but have a family member that needs a bit of help. If you have a family member facing hard times, there are some things that you can do to help them during these difficult times.
Here are five key ways to help out a family member:
1. Gift cash
If the issue is from having short-term cash flow, you can consider giving them a gift of cash. Decide how much you can spare to give them without causing yourself financial hardship.
You can give them the maximum amount you can afford or give them smaller gifts on a regular basis while your loved one gets on their feet again.
2. Help create a budget
For family members who are struggling to make ends meet, you can offer to help them make a budget. There are a number of budget techniques and there is sure to be one that works for them.
Sit down with them and make a list of all of their expenses and income. Then figure out where they can cut costs.
Maybe their financial woes can be solved by living frugally for a bit. Or maybe they could use a cash envelope system to make sure they don’t overspend.
3. Co-sign a loan or take out a loan
Another way to help navigate family financial problems is to take out a personal loan or co-sign a loan with them. This could help a family member with a low credit score who needs help while they wait for the situation to get better.
If you decide to go this route, make sure the terms of the repayment plan are clear. Also, make sure you understand the financial and legal implications of signing a loan.
If you co-sign, you are legally obligated to pay the loan if the other borrower can’t and it could impact your credit score. It’s important to make sure you can make those payments without causing yourself too much financial stress.
4. Provide employment
If you rather not give cash or take out a loan for your loved one, then consider employing them for tasks at an agreed-upon rate. That can mean helping out around the house, doing yard work, or helping out if you own your own business.
Treat them like you would an employee and clearly state what your expectations are, as well as how much you’ll pay them and when you expect the job to be completed.
This option is a great choice if you have a number of things that you’ve been putting off doing, and it will help your family member earn some extra cash.
5. Help in non-cash ways
If you don’t want to give a family member cash, then you can help out in other ways that don’t involve cash. For example, you can offer to babysit while they are at job interviews or buy groceries once a week, so they have food on the table.
You can also give them gift certificates to specific places. This option gives you more control over how your money will be spent.
You can navigate family financial problems!
Family financial problems aren’t always easy to solve. It can be caused by a number of different factors, such as a job loss or high debt. And it causes a lot of strain on your family.
However, with these tips, you can improve your financial situation and prevent future money problems!
Remember, if you want to help your loved ones navigate their financial hardships, you can help them by buying groceries, connecting them with local resources, giving them cash, or even co-signing a loan.
So whether you yourself are having family financial problems or an extended family member is, you can navigate through it successfully!