[Reader Question]How do I support my family without compromising my financial plans?

How are your 2019 money goals so far? We are in Week 23 of the #52WeekChallenge and since it is the end of the month, this is the right week to catch up if you have fallen behind. June is also perfect to renew your new year resolutions, if you had resolved to save some money this year and have done nothing about it. Here is how to start the #52WeekChallenge today!

In our society, many parents view educating their children as an investment that is supposed to pay off, beyond making the child financially independent. They expect that the sacrifice they make to educate their children will pay back in form of those children taking care of the parents’ financial needs later in life, or even by educating and supporting the siblings. This expectation is not just a parental expectation, sometimes even the community will expect financial support from the relative who had a decent education whether they contributed to that education or not.

For the parents, it sometimes may make sense. In an economy such as ours, we have low-income parents making a very objective choice to educate the child who has the best education prospects to the detriment of the rest and with the expectation that this child will support their siblings financially. Parents who have a bit more income will trade off retirement stability to educate their kids, by taking loans to pay school fees, often retiring with no assets.

With this reality, how do we support our families without compromising our financial future? First, we have to consider that help can be harmful.

• We can be generous to our detriment, creating an endless cycle of poverty. An example of this is where we forgo saving and investments, to help others. It may feel self-indulgent to save and invest while others lack, but often, money has the same rule as plane safety “put on your oxygen mask before helping others”. With a financial safety net, you are better placed to help people.
• We can help in ways that create dependence. This is especially so if we give cash handouts that have no end in sight, and give in ways that discourage people from taking initiative and pursuing income-earning opportunities. A good example of this is where you start out supporting siblings’ school fees, and years down the line, you find yourself doing everything for the entire family.

With that in mind here are some ideas on how to structure your support to your family.

1. Set clear boundaries on who you will support, for what needs, and for how long. Let us start with who. We believe that the child belongs to the community, and this can play out in interesting ways. In its true form, the community is supposed to support the raising of the child. However, in most instances, the community shows up after the child is done with school and is earning money to claim support. Unless you have unlimited resources, you have to limit who you support. You should reserve regular support for your immediate family, and occasional support for extended family members who genuinely cared for you. On what, help people meet their basic needs only, and they will work towards their wants. Finally, decide how long you will give regular support. If you are responsible for siblings’ education, it goes without saying that this is a revolving loan – which the younger siblings payback by contributing to support the family once they are earning an income.
2. Sometimes you may need to support your siblings who have families. You are better off helping them fund their kids’ education as opposed to funding their daily expenses. Let the kids’ parents cater to the day to day expenses and things such as food, school uniform, and supplies. Remember, you do not want to create dependence, you just want to support them to educate their children.
3. When it comes to your parents, think sustainability, as opposed to cash transfers. If they are in good health and are pursuing income-earning activities, consider making a one-off investment in those activities to boost their potential. If they are not in good health or do not have projects they are working on, think passive income – make investments that earn money, so you do not have to keep dipping into your regular income to help. With a relatively small amount of money, you could buy a plot of land in the local shopping centre and build them a couple of rooms that they can rent out and earn an income this way. This takes the burden off your back permanently.
4. Do not carry the burden alone. If you are the nicer sibling, parents will reach out to you more often than the rest for help. Do rope your siblings in and demand that they make a proportional contribution to supporting your parents.
5. Have a giving budget as part of your expense plan beyond which you will technically not have money to give. On the months you do not exhaust it, you can set that money aside to give for emergencies.

This goes without saying. Do not pay for people’s wants. Parents especially can really guilt you into funding all sorts of things because they raised you, or that their friends’ kids are doing xyz etc. Grow a spine, learn to say no and to be clear about what you can or cannot do.

Finally, create healthy boundaries and manage the information you share. For example, it may be necessary to keep your income level private to manage expectations. The same goes for expenditure. Parents who live upcountry may not have the right context to evaluate if your rental payments are good value for money – all they will see is that you are paying too much for rent.

Be ok with disappointing some people. You cannot please or save everyone

Image credit: Question by Corey Templeton.