During uncertain times, people turn to their friends and family for financial help. Financial hardships can occur because of a sudden job loss or substantial medical expenses. You must consider the impact of the problem and whether you have a plan for avoiding the same pitfalls in the future before helping your loved ones in financial trouble. If you were wondering how to solve financial problems in your family, we have got you covered.
Long-Term Insurance
Another way in which you can help your family member is by taking long-term care insurance. Health issues are uncertain and come with huge medical expenses with long-term consequences. Also, if you are the bread earner of a family, you must apply for an insurance plan like ULIP, endowment savings plan, or others so that your family can stay financially secure even after an unfortunate event.
Evaluate Financial Situation
Financial consultants advise family members to sit down together to evaluate finances. They need to discuss various financial matters like where’s the money, how can one access the money, and what are the penalties involved in taking a loan to meet finances.
Give a Cash Gift
If your loved ones face a short-term cash-flow problem, you can assist them with a cash gift. For this, you must decide on how much you can give them without putting yourself in financial jeopardy. To help them, you can either give the maximum amount you can afford all at once or perhaps give smaller gifts. You must keep in mind that cash gifts are not a loan that must be repaid back in future by your family members.
Make a Personal Loan
Your family members can approach you anytime and ask for a short-term loan. You must talk frankly with them, clearly write the loan terms on paper, and have both parties sign it before offering them the loan amount. This ensures that each party is clear on the financial arrangement they’re entering into.
Co-Sign a Loan
You can be a co-signer in case your family applies for a loan. It is critical to understand that you are legally binding yourself to repay the loan if your family member who is borrowing the loan fails to do so. The lender under this situation can take legal action against you and require that you pay the full amount, which can affect your personal finances. Before co-signing for a loan, make sure you:
- Check your family member’s credit reports, credit scores, and monthly budget to know their ability to repay the loan.
- Meet with the lender in person and understand all the terms and conditions of the loan.
- Maintain copies of all the documents that are related to the loan.
- Ask the lender to notify you if your family member misses a payment or makes a late payment.
Create a Bill Paying Plan
People facing financial hardships aren’t aware of where their money is going. You can help your family in creating a detailed budget and help them understand the importance of financial planning. In order to do so, you may offer to show them your budget and your bill-paying system that helps you in staying financially secure.
Offer Non-Cash Assistance
If you’re not willing to give your family member cash, you can even offer non-cash financial assistance. You can do so with gift cards. With these gift cards, you’ll have more control over what your money will be used for.
Prepay Bills
To help your loved ones during uncertain times, you may want to consider prepaying one or more of their regular bills. Doing this may help them avoid a short-term crisis and can give them the little extra time they need to work out their situation.
Help Find Local Resources
You can even help your family members to find local professionals that can help them in the right direction, such as:
- Career counsellors and employment agencies
- Welfare agencies and similar services
- Credit and debt counsellors
- Lenders who can provide short-term solutions
So now that you know how to solve financial problems in family, you must sit down with your loved ones and ask them as to what help they need to work their way out of uncertain financial emergencies. From there, you’ll better understand the type of information and assistance they need.
