Amid rising inflation, interest rates and worries about a recession, money is getting tighter for many people and probably you too. Still, 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 own interests first? Use these criteria as a guideline.
WHEN YOUR FINANCE ARE AT RISK
Think carefully before you spend any amount on someone else, whether it’s $20 or $2,000. Will it jeopardize your ability to pay bills or save for emergencies? Picking up the lunch tab for a friend or helping your child get to college shouldn’t come at the expense of your own expenses and goals.
A crucial part of this review: Assume 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 gift it with no expectations on your part, then you can’t afford to help, says Lacy Rogers, a certified financial planner in Fort Worth, Texas.
Saving for an endowment budget in a designated account can create a clear separation for your expenses, says Valerie Rivera, a Chicago-based CFP. If you don’t have enough money in the account, that indicates that you can’t afford to miss the money.
YOU FEEL PRESSURE TO PAY
You are under no obligation to give out money even if you have the means to be generous. You have the right to say no if you feel stressed or uncomfortable. Don’t let others tell you something you’ll regret.
Saying no can be a challenge, especially when you’re dealing with family or a close-knit 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 turn to you for money.
Many people who are the first in their family to come to this country or go to college can very quickly become other people’s financial safety nets, Rivera says. That is a heavy burden to bear.
Talking about finances with loved ones early often helps set expectations. It’s totally okay to recover or see what money looks like for the first time in a conversation with friends, in a conversation with family, says Kate Mielitz, an accredited financial advisor, or AFC, in Tumwater, Washington.
Take the time to process every money request that comes your way. Consider passing if you are concerned about abusing 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 for whom you went shopping. You may not be able to buy their groceries for them anymore, but you can help them with the yard work, and maybe that will ease the burden in some other way, Rogers says.
If you cannot personally contribute, point your loved ones in the direction of those who can. Familiarize yourself or help your friends and family become familiar with resources in the area if that is a food bank, if that is second-hand clothing, if that is job services or assistance with resuming that in the community to help them get ahead and get a stronger foot, says Mielitz.
Visiting 211.org is a way to find help with basic needs such as paying utility bills or accessing food. For people who want help managing their money, Mielitz recommends making a free virtual appointment with an AFC through the Association for Financial Counseling & Planning Education.
YOU HAVE MONEY TO TREAT YOURSELF
Taking care of your needs and goals (and giving them to others) is important. But everyone deserves a little fun too.
Were human and we need balance. We can’t just save for later and not enjoy life today, Rivera says.
If you have discretionary money, don’t spend it all on others. Leave room for self-care, entertainment, or whatever brings you joy.
We often use money to find ways to improve our mood. Whether that’s going out for dinner or having a drink with a friend or buying a book, Mielitz says. But you need to create a spending plan and know what you have access to because there are times when we don’t have the money and spend it anyway.
Putting money aside or shifting expenses back and forth on a regular basis gives you the flexibility to spend yourself without hurting your finances. If you can’t find extra money, use resources like the free session with an AFC. An expert can help direct your dollars in the right direction.
Life in general is a series of trade-offs, Rivera says. So it’s pick and choose, what’s really going to add value to your life.
(This column was provided to The Associated Press by the personal finance website NerdWallet. Lauren Schwahn is a writer at NerdWallet. Email: [email protected] Twitter: @lauren_schwahn.)
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