Things to Consider When Borrowing Money for Parents
It can be an awkward situation when your parents ask for your help. It may be something that happened to them that is entirely out of their control, or it may be as a result of poor financial decisions. When you feel like it is the right thing to do, you may want to help your parents out by giving them money or helping with a few bills. However, if your parents want you to borrow money to help them or they want you to cosign on a loan, you may want to tell them no and find a different way to help.
Consider the Dangers of Cosigning a Loan
If your parents are asking you to borrow money for them, it is usually because they do not qualify for a loan themselves. The same applies to cosigning a loan. This means the banks feel they are too much of a risk to lend money to. If your parents cannot make the payments, then you will be required to make the payments for them. This can affect your ability to pay your own bills or to qualify for a loan. It is important to protect your financial future so that you can continue to help your own family.
Consider Other Options to Help Your Parents
This does not mean that you cannot help your parents out if you feel like it is something you can afford to do. You may look at your budget and decide that you can send a certain amount of money each month to help your parents out. You may want to attach a time frame to that money and explain to your parents that you can help them for the next few months. You may decide that you can give a lump sum amount to help them out. Another option is to pitch in here or there by buying groceries or occasionally paying the power bill. You do not want to enable your parents’ poor behavior like a drug or gambling addiction, but if they are having a difficult time due to a job loss or illness, you can help them out.
Make Sure Your Spouse Is on Board
If you are married, then you need to have the full support of your spouse before you help out your parents or other family members. This should never be something that you hide from your spouse or partner. If one person does not feel good about helping then neither of you should do it. This is important to help keep your relationship intact.
Remember to Take Care of Your Finances First
It can be difficult to deal with the expectations of family members to help them out and then not be in a position to do it. If you are feeling a lot of pressure to help your family, but you cannot afford to or you feel like it would be enabling bad behavior, it can make the family dynamic very uncomfortable. One option is to help them find other resources to help them out. For example, you may want to look into services offered by the government to those that are in need. If the situation is really bad, they may be able to have help paying utility bills and get help with food. There may also be counseling programs that can help them out. If you live nearby you can help by dropping meals by or having them over for dinner.
Do Not Go Into Debt to Fix Someone Else's Mistakes
It is important that you do not go into debt or allow them to ruin your financial future by their poor choices. Saying no does not mean that you are turning your back on your family or that you do not love them. It just means that you cannot help them in the way that you want. If the situation becomes too serious, you may need to step back and separate yourself from your family until the relationship improves. It can be difficult to do this, but it is necessary in order to protect your finances. It is important to realize where the line is drawn and to realize just how much you can do for them.