Amidst rising inflation, interest rates and recession worries, money is getting tighter for many people – and probably for you. But there may be charities you want to support, friends or family asking for financial help, and things you want to buy for yourself. It is possible to do these things even on a budget. But if you want to be responsible with your money, you have to know where to draw the line.
When is it okay to put your best interests first? Use these criteria as a guide.
When your finances are at risk
Think carefully before spending money on someone else, whether it’s $20 or $2,000. Will it jeopardize your ability to pay bills or save for emergencies? Paying a friend’s lunch bill or helping your child get through college shouldn’t come at the expense of your own spending and goals.
A crucial part of this assessment: assume that you will never get the money back. There is no guarantee that your loved ones will repay you, no matter how well-intentioned they are.
“If you can’t afford to give without expectations, then you can’t afford to help,” says Lacy Rogers, a certified financial planner in Fort Worth, Texas.
Saving for a “charitable budget” in a specific account can create a clear separation of your spending, says Valerie Rivera, a Chicago-based CFP. If you do not have enough money in the account, this signals that you cannot spare the money.
You feel pressured to pay
You don’t have to spend money even if you have the means to be generous. You have the right to say no if you are stressed or uncomfortable. Don’t let others tell you something you will regret.
Saying no can be challenging, especially when it’s about family or a close community. Feelings of guilt and obligation often cloud judgment. Your mom raised you, so the least you can do is pay off her credit card debt, right? Not if it allows her to repeatedly overspend and come to you for money.
Many people who are the first in their families to come to this country or who go to college “can very quickly become other people’s financial safety nets,” says Rivera. This is a heavy burden.
Having early conversations about finances with loved ones often helps set expectations. “It’s perfectly okay to recreate or discover what money looks like in conversations with friends, in conversations with family,” says Kate Mielitz, an accredited financial advisor, or AFC, in Tumwater, Washington.
Take your time to process every money request that comes your way. Consider passing if you have concerns about being taken advantage of or supporting harmful financial behavior.
You can help in other ways
Supporting the people you care about doesn’t always have to cost money. Your time, skills and knowledge are also valuable.
Suppose you have an elderly neighbor who you used to shop for groceries for. “Maybe you can’t buy their groceries for them anymore, but you can help them with their yard work, and maybe that relieves them in some other way,” says Rogers.
If you can’t get involved personally, refer loved ones to those who can. “Become acquainted, or help your friends and family become acquainted with resources in the area — whether that’s a food bank, whether it’s second-hand clothing, whether it’s employment agencies, or who Resuming help in the community — to help them move forward and get a stronger foot up,” says Mielitz.
Visiting 211.org is one way to find help with basic needs like paying utility bills or accessing groceries. For people who want help managing their money, Mielitz recommends scheduling a free virtual appointment with an AFC through the Association for Financial Counseling & Planning Education.
They put money aside to treat themselves
Taking care of your needs and goals (and giving to others) is important. But everyone deserves a little fun too.
“We are human and we need balance. We can’t just save for later and not enjoy life today,” says Rivera.
If you have spare money, don’t spend it on others. Leave room for self-care, entertainment, or whatever brings you joy.
“Often we use money to find ways to improve our mood. Whether it’s going out to eat, having a drink with friends, or buying a book,” says Mielitz. “But you have to create a spending plan and know what you have access to because sometimes we don’t have the money and we still spend it.”
Putting funds aside on a regular basis or shuffling expenses can give you the flexibility to indulge yourself without hurting your finances. If you can’t find extra money, use resources like free session with an AFC. An expert can help direct your dollars in the right direction.
“Life in general is a series of compromises,” says Rivera. “So it’s a choice, what will really add value to your life?”