After experiencing the longest government shutdown in history, many federal workers and contractors who experienced financial hardships are still trying to recover.
The government shutdown tested people’s financial preparedness, and many unfortunately failed. Also, with another possible shutdown looming, many people are frightened that this will catapult them into homelessness.
Approximately 1 in 3 Americans do not have emergency savings to cover a $500 emergency, according to personal finance website Bankrate. This statistic became a heartbreaking reality when real life financial hardship stories recently surfaced due to the federal furlough.
Unexpected emergencies like medical bills, the death of a family member, job termination, or an unwarranted furlough, are common causes of most financial traumas. The reasons people do not set aside money for these unexpected emergencies range from unlivable wages, sluggish salary raises with rapid inflation, unfair wage gaps, or even poor financial habits.
When a loved one is dealing with a temporary financial hardships, there are ways to provide assistance or relief.
4 Ways to Help Loved Ones Dealing with Financial Hardships
If you have the financial ability to lend money to a loved one and are confident you will be repaid, offer a short-term loan. Treat the loved one with compassion, but explain the offer is a loan and is expected to be paid back.
Write up and sign an agreement between you (lender) and the loved one (borrower) to clarify the financial transaction as a loan.
Debt.org shares that a loan agreement between loved ones should include:
- The names of the parties involved
- The date of the loan agreement
- The amount borrowed (principal)
- Interest rate (if applicable)
- Repayment terms (monthly payments over a specific period or a lump sum on a certain date)
In the event of nonpayment, the loan agreement should also include:
- Modification of loan terms
- Taking ownership of collateral
- Possible legal action
Hard feelings and arguments between relatives and friends occur when money is lent in good faith but not repaid. So, take the advice I give to my clients who consider lending a loved one cash …
“If you can’t afford to give the money, don’t lend it.”
Instead of lending the money, give the loved one the amount of cash you can afford as a gift. By giving money as a gift you release the possible future tension in the event the loved one does not pay you back. Consider it as a few early birthday or Christmas gifts.
When giving money, do it privately, discreetly, and without pity. Many loved ones suffer in silence, financially, because they do not want their business shared.
Assure the loved one that you will not share the monetary gift to anyone. Respecting the loved one’s need for privacy is important, especially if they are a very private or prideful person.
Pay a bill directly
Consider paying a specific bill or expense directly if you prefer not to give a loved one cash, or they do not want to accept your loan or monetary gift.
Paying a utility, car payment or insurance, or even a rent or mortgage payment, will release a significant financial burden.
Some companies, like PECO, formally Philadelphia Electric Company, allow people to help out and pay a bill on behalf of their customers.
Provide a service
Perhaps you may be unable to give a loved one money.
An act of service will go a long way when it comes to helping a loved one experiencing financial hardship. Sometimes, taking time to do something for someone is more helpful than giving money.
Some amazing acts of service can include:
Care for the kids
Offer to babysit or care for their elderly family member who requires special attention. This will free up some time for the loved one to work another job, or get some much-needed rest.
Cook a few meals
You may be aware of a loved one who is struggling to feed their family. Cook and deliver meals for a few days to offset their grocery bill, and relieve the burden of cooking.
Chauffeur for a day
If a loved one does not have transportation, be their chauffeur for one or a few days. Driving them to appointments, run errands, or their job will be much appreciated.
Clean up the house
Clutter can sometimes cause just as much stress as the financial trauma. Offer to clean a loved one’s kitchen, bathroom, bedrooms, or the entire home to eliminate that responsibility from their list. Often a clean environment can calm our consciousness to better deal with difficult situations.
IN CASE YOU MISSED IT:
- WHEN A RELATIVE DIES AND YOU CAN’T AFFORD THE FUNERAL
- HOW TO BUDGET FOR UNEXPECTED WINDFALLS
- Wealth 101: Black Buying Power Is Not A Measure of Real Wealth
Black Enterprise Contributors Network