How To Set Money Boundaries With Family (For Real)

Financial boundaries with family can be a tricky topic. So many of us want to figure how to financially help a family member when they are in need, but at what cost? It can become even more challenging when trying to set healthy boundaries with parents who have done so much for us. In this post, I'll share my tips and insights on setting financial boundaries with family members, including parents, siblings, adult children, and even young children (yep, tips for TODDLERS!).

The suggestions in this post are based on my personal experience from my own life, with friends, and as a mental health and substance abuse counselor who worked with families. I believe that's important since finances are so often tied to our emotional wellbeing.

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This post is sponsored by Lexington Law, a trusted leader in credit repair.

They believe in supporting people in their credit repair journey through all of life's milestones. I know all too well how family can negatively impact our credit. In my career I've seen family members co-signing for things, and in turn ruining loved one's credit, and even some committing fraud using the other's identity. Financial boundaries with family can be more important than we realize.

With that said if you find yourself in a similar situation and have inaccurate, unfair, or unsubstantiated negative items on your credit profile click here to receive your FREE credit report consultation from Lexington Law and learn how they may be able to help you!

What are financial boundaries?

Financial boundaries are the rules and limits you have around spending, lending, and giving money to ensure you are financially taken care of and don't end up feeling resentful, angry, or disappointed.

How to know if you need financial boundaries with family:

If you find yourself…

  • Fighting with your spouse or significant other about money and family
  • Becoming passive aggressive
  • Leaving conversations or situations more depleted than before
  • Struggling with racing thoughts, broken sleep, or other nervous system response
  • Repeatedly being asked for money (or support that requires money from you) by the same person

Or if you are feeling…

  • Angry
  • Resentful
  • Worried
  • Stressed
  • Overly invested in what they're doing (i.e. controlling)

You may need to set some financial boundaries with family.

I once read something along the lines of…

“Never ‘lend' money to friends and family expecting to get it back. Nothing will ruin the relationship faster. Get in the mindset that it's a gift, not a loan, no matter what the receiver says.”

Codependency + Money Boundaries With Family

I think people get tripped up by codependency when it comes to money and family.

Codependency is when there is an unhealthy reliance or addiction to the relationship. It can look like using emotional or behavioral manipulation to control the relationship or (perceptually) boost one's self esteem/self worth.

A common example I see is when it comes time to get married.

Families often “want” to contribute to the wedding, but it's really just a means of controlling the wedding. How many weddings have you heard people say, “oh well they're paying for it so I have to do X, Y, or Z” while seething?

That story is a prime example of codependency where people are manipulating others through money. One party is overly invested in what the receivers are doing with money, while simultaneously bolstering their self worth by being the financial “savior” of the wedding. The other parties typically involved end up feeling resentful, stressed, or angry throughout the process.

In my opinion, the “control through money” narrative is where a lot of negative money messages get passed down generationally.

Examples of financial boundaries with family:

Some examples of financial boundaries with family could look like:

  • Having an agreed upon limit on the amount of money you can spend on gifts
  • Never lending money to family
  • Being able to remain on the family cell phone plan until a certain age
  • Paying rent or utilities when living with family members
  • Not providing financial support if a family member doesn't have a job
  • Giving/receiving without expectations or strings attached
  • Shared vs. separate miscellaneous spending accounts

I'd suggest sitting down and thinking about where you feel anger, resentment, stress, fear, worry, or unease around money and your relationships. Write down what comes up for you. Then create your own list of financial boundaries that can act as a guiding set of rules for you moving forward.

I want to stress: every situation is unique. There is no one size fits all answer to this.

If you feel good about taking care of your family financially, then by all means, go for it.

However, if you're reading this, my guess is you aren't really okay with it; which is okay too!

Lately, I've been seeing parents asking to move in with their kids, asking for a monthly allowance, and even parents asking their kids to pay them for watching their grandchildren as if they were nannies/babysitters.

I'm not judging any of those situations. In fact, I believe all of these situations are great if they work for you. But if they are impacting you negatively, financial boundaries need to be put in place.

How to set boundaries with parents asking for money:

Over the last few years, I've seen a lot of my friends struggling to set financial boundaries with their parents.

After all, their parents took care of them the first 18+ years, wasn't it time to return the favor? (at least that was the question they'd bring to me)

SIDE NOTE: these tips really apply for all adult-adult relationships. Parents are definitely the most emotionally driven, but this sections tips really span for aunts, uncles, grandparents, or any other sort of “adult” family member… and I guess siblings would work here too… they probably just hold a little less guilt over you than parents who most likely paid for your existence growing up.

Which leads me to: letting go of guilt.

I'd say that's the biggest contrast in setting financial boundaries with family over friends.

Family tends to come with a lot more strings and a lot more guilt. Meaning when you want to set a boundary, you're quickly faced with comments like, “Well, I paid for you to go to school” or “Yeah? Well you owe me 18 years worth of grocery money!” or “You treat me like a convenient ATM!” or worse…

Here's what you need to remember:

We cannot be responsible for the lack of boundaries others had with us.

Moreover, when parents did those things they either knew full well what it meant to be a parent and chose to take that responsibility on.

Or, like I just mentioned: they didn't have their own financial boundaries in place and are now trying to punish you for it (i.e. the generational codependency I was just talking about).

If a parent is asking for money out right, you need to do a few things:

Look at your finances and see if you'd be okay finding out they spent the money on ___________ (insert most blood boiling thing you can think of, whether that's gambling, drugs, a designer purse, etc.).

If you can imagine the “worst case scenario” and still feel at peace with your decision to give them money, then go for it.

If you think it'd harm the relationship, then say no.

Yes, they'll be upset, but that's their emotion to deal with, not yours. To take responsibility for their emotions would be to back slide into that generational codependency we were just talking about.

It's a lot better in my opinion to set a boundary, even if it upsets someone, then to risk your own health and wellbeing by giving from an empty cup.

You need to take care of yourself first and foremost.

Of course there is a middle ground…

If the person is asking for the money to pay rent or a credit card company, etc. and you do want to help, you could ask to pay the bill directly for them or use a cashier's check to ensure the money is going to the intended place.

Just be prepared, this could upset them. Again, that's their emotional baggage to take care of, not yours!

A softer approach…

Personally, I need the blunt, “no” otherwise I'll lose my nerve.

I start worrying if they're mad and falling backward into people pleasing and wanting to take care of others at the expense of myself… it's a slippery slope I've historically slid down at such a rapid pace I didn't even realize what was happening until I totally caved on my boundaries and was tending to my resentful emotions after the fact.

If you are someone who can stick to your boundaries, despite any guilt trips, or the like, from a family member may consider a softer approach.

This could sound like…

“I wish I could help, but I can't right now”

Keeping in mind this could leave room for the person to ask “why.”

I'm not someone who can lie, even white lies like, “oh we can't afford it right now” don't sit right with me. I also am not someone who can shift blame, (i.e. the good ol' “blame your spouse” excuse).

So for me, saying, “I wish I could, but I can't right now” doesn’t work… I don't “really wish I could help”, otherwise I'd be doing it. And I don't have a good excuse to back up what I said if I'm asked why because the simple fact is that I don't want to.

Now if you can stick with a softer approach like this and someone did ask why, consider saying, “it's not in my best interest right now,” or something to that effect. Most people won't push past that.

“I can't give you money, but I could do X instead.”

This shows you are willing to do something, and softens the blow a bit. This could be paying for the bill directly, helping out with time instead of money, or providing some other need in lieu of money, if that feels right for you.

KEEP IN MIND: As you begin to set these money boundaries with family, there is no right or wrong. You may overcorrect or undercorrect. Just take note and try something new next time!

Remember your needs too…

Lastly, if things are going south, I think it's vital to ground back into your emotions and budget.

In this article on friends and finances, Lexington Law points out that respecting your budget should be a top priority in keeping your finances in order. (read more of their tips on money boundaries with friends here!) And I'd actually say, their tips are great for dealing with family too.

Furthermore, unhappiness and stress can be associated with worse credit and overall financial standing (learn more from Lexington Law here). By taking care of yourself emotionally, you may be setting yourself up for better financial success as well.

How to set financial boundaries with kids:

Setting financial boundaries with children is an essential step in ending the generational codependency tied to money so many of us face.

Of course, setting financial boundaries with little children versus adult children will look different. Let's look at that:

Toddlers (1-3 years old):

Our babies! It's important to note that before the age of 7, children are basically on “record;” meaning they are taking in everything around them and it's all imprinting into their subconscious mind and shaping SO much of who they'll become.

This is where they learn how to model codependency, feelings, relationships with money and so much more and is actually a vital time to have healthy boundaries in place.

For toddlers, this could mean simply modeling healthy financial boundaries around them.

For instance, actually setting boundaries with family members in front of your child models self care and self worth (keys in breaking generational codependency). 

Historically though, most of us have watched family’s financial boundaries get crossed. We’ve watched our parents sit silently in resentment, or become passive aggressive, or vent on the car ride home. All of those sideways expressions of anger can feed the generational codependency we are trying to break.

It could also mean having financial boundaries with yourself.

For instance, when you feel down, practicing healthy coping skills instead of “treating yourself” to cheer yourself up. Children learn emotional regulation by being around an emotionally regulated adult.

If your go-to is to distract yourself from your emotions by spending money, that's what they'll learn too.

Another little trick you can try is practicing toy rotation and keeping “things” minimal.

Not only will this encourage deeper more fulfilling play (and your child will actually play with their toys) you won't need to “keep feeding the beast” of buying more stuff because they lost interest. A key coping skill.

Children (4-17 years old):

Obviously 4-7 and then 8-17 are wildly different ages and you could take financial lessons much deeper. But we are focusing on the high level of setting financial boundaries today.

Chores and allowance

Start setting financial boundaries with young children by giving them an allowance when they complete chores. Each chore is worth a set amount of money they can earn.

When you go to the store, instead of buying them something because they want it or are having a temper tantrum, you can teach them about earning money and buying their own things.

As they get older, you can pay them on a prepaid card instead of cash so they can get used to checking a balance and having plastic in hand and you can begin introducing bigger concepts. For more tips on how to effectively handle allowance with kids, check out this post from Lexington Law.

In my experience, people learn the value of a dollar much quicker and begin setting their own internal financial boundaries (e.g. maybe I don't want to spend money on this today because I want to save for this tomorrow), when they see how long it can take to save for something or how it feels when they’ve spent their money and want something else.

Either way, healthy financial boundaries with young children and teens not only models a healthier relationship with money, but it lays the framework for healthier relationships for them as adults.

Discover more ways to teach financial literacy to kids in this article from Lexington Law!

Adult children (18+)

Like all of the suggestions in this post, the financial boundaries you choose to set are really up to you.

Here are a few questions to ask yourself when it comes to setting healthy financial boundaries with your adult children:

  • Can you give to them and trust they are making the right choices without getting overly invested?
  • Can you give without involving your own ego or need to bolster your self worth/self esteem? (i.e. you aren't giving as a means of making yourself feel better or buying your way into your adult child's)
  • Can you give without strings?
  • Can you give without the need to control the outcome?
  • Are you giving because you want to and not out of fear?

If you answered “no” to any of the questions above, you have some work to do in healing your own relationship to to money and self worth. A step in that healing journey could be setting financial boundaries until all of those questions become a “yes.”

Setting financial boundaries with adult children:

Oftentimes, we keep adult children “dependent” on us to manipulate them into having a relationship with us without even realizing it.

We don't feel loved or secure enough on our own, so we use money as a way to bypass having a real relationship and instead focus on the transactional one to make us feel “needed.”

It's not something to beat yourself up over or get upset about.

Again, it's learned generational trauma that we've historically passed down.

The job now is to recognize it and heal it.

To stop giving from a place of codependency, and start giving from a place of freedom, or not give at all if that's where you are at.

IMPORTANT: Sometimes not giving at all is exactly what our loved ones need too…

(this section applies for ANY family member or person in your life)

I used to work as a substance abuse counselor. There was a common phrase we'd say to the patient's family members: “you are loving them [the patient] to death.

Meaning your codependency (like the desire to ensure your loved one feels no pain or isn't uncomfortable and jump in and “save the day before things get too hard on them”) is actually preventing them from moving forward and causing more harm than good.

When we keep jumping in to financially save someone who historically hasn't been able to financially support themselves, the message we are conveying through our actions is essentially, “I don't trust you to handle this on your own and you aren't good enough to do this for yourself, so I'll do it for you.”

Which in turn, limits their self esteem and confidence and perpetuates the cycle of harmful behaviors.

Removing financial support and doing a hard “no” can mean they finally step up to the plate and get better.

Of course it could mean things get worse, but the reality is, rare is the time things get better by doing the same status quo. Yes, it's a risk, but so is staying on the same path. Which, more times than not, is slowly killing the person when drugs, gambling, or another addiction is involved.

If you aren't ready to fully cut someone financially out…

I spent nearly two years as the bridge between wealthy parents providing financial support to their adult children in early recovery.

This meant that I essentially was the person enforcing financial boundaries for families who either weren't strong enough to do it on their own yet, or simply didn't want to deal with it.

Here's how I handled it:

Set parameters that everyone agrees on

We set up clear and concise boundaries of how much money could go where and when the account would replenish so everyone knew what to expect.

I put my phone on mute.

Yep, I'd get phone calls (20+ in a row sometimes) at all hours of the day and night… (even at 3 am) where people were trying to get money from me. I had to put my phone on mute.

I also had to mute them or hang up when they'd start cursing me out and saying awful things to me/about me.

To have strong financial boundaries meant having strong boundaries period for me at this stage otherwise I'd find myself on the receiving end of a lot of emotional and verbal abuse.

Don't waiver

The most challenging situations I found myself in, was when a parent would call asking me to break one of the agreed upon parameters because their child needed something or the child had been calling them complaining about me…

Having not been a parent yet in my life, I imagine that's a similar situation many parents or siblings find themselves in when dealing with money and a family member in a not so great place.

Anyway, I'd have to break the parameters we had agreed upon sometimes which only made the abusive calls worse.

The people I could set the parameters without wavering from them, would quickly adjust to the financial boundaries… or they'd get creative with outside solutions. But those didn't involve me so I didn't stress about it. And that last tidbit is key.

When you have financial boundaries that you follow through with, you'll reclaim your inner peace. The codependency of feeling responsible for others will fall away. And you can take care of yourself.

Start with one small action and build from there. Stay strong.

And remember, if your credit has been negatively impacted by inaccurate, unfair, or unsubstantiated negative items, contact Lexington Law today for your FREE credit report consultation.

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