I wanted to write a short personal post about my experience with money and family, and try to think through why this can be tricky and what can be done about it.
In a lot of what I read about financial independence the only role a family ever seems to play is in providing wealth through inheritance, or as an alternative to rent for people who want to save up for a house deposit.
I’ve found it hard to identify with this.
In a previous blog post (Why I want to be financially independent) I mentioned that I was financially exploited by a family member.
A more blunt way of putting it would be that, when it comes to family, I have this fun mix of guilt and awkwardness about money that makes me a bit of a push over.
I also explained that my own FIRE obsession was sparked by a lot of thinking about my life goals.
Perhaps this makes my journey seem more purely intellectual than it is.
The fact is, my very strong desire to take control of my finances was wrapped up in another personal epiphany: I was being financially scammed by my older brother.
I’ve also loaned thousands of pounds to my mum, stepdad, and one of my siblings. I’ve separated these two cases out in this post, because they feel very different to me and probably have different solutions.
The fraternal rent scam
I’m owed several thousand pounds by a brother I rented with. Over the course of more than a year he always either paid late or not at all, mitigating it by paying reasonable amounts a couple of months in a row before the tenancy renewal so that he could convince me that things were back on track.
How did I end up losing so much money in a fraternal rent scam? How did I let it happen for so long?
As stupid as it sounds, I really didn’t think at the time that the pattern would continue as long as it did. Each time we spoke about it I felt that it was finally sorted.
Now that I reflect I think this was because I hadn’t appreciated that I was being manipulated.
The thing is, people don’t say to your face ‘I’m manipulating you’. Someone you grow up with (we’re two years apart in age), and who is in fact your older brother, wouldn’t exploit you – would they?
I think the family context might be important too – I grew up with a powerful myth of ‘family first’.
My mum had some pretty hard times bringing us up, and we had no extended family other than some distant members who we met every now and then.
It was in this context that my mum, very often and in the strongest terms, preached a message of solidarity between us.
Even as young kids, me and my brothers talked a lot about how the first of us who made money would buy houses for each other and for mum. We felt special and there was a sense of family mission. I can’t quite explain that, maybe you had similar feelings growing up?
I think that sense of family solidarity in a way made me more vulnerable to being exploited.
Even now I feel pretty frustrated that no one else in the family seems to take what happened very seriously. More than just anger at losing money, I feel upset because it shook my sense of what family was all about, like my brother had broken a family contract.
Back to the other family money issues
In a way dealing with the money owed me by other family members is even more awkward.
Partly that’s because of the way that money has always been asked for.
I get no warning, just a phone call out of the blue, and it’s always an emergency. If I don’t lend a few hundred pounds (it’s never more than that) or guarantee a loan today then the family business will go bust or the house will be repossessed.
Then all is quiet until the next emergency.
To stop this I have to find a way to talk to my parents about their lifestyle, their spending, their finances.
My upbringing was extremely hierarchical (I was grounded for entire summer holidays at a time), but now I have to invert that and be the precocious 26 year old bore who tells their parents off for eating too many takeaways instead of saving up for emergencies.
Awkward.
Still, instead of being a complainy pants I’ve made that my new personal life goal. Here’s the approach I’m going to try out:
Getting money back
- Make a payment plan for each person who owes me
- Talk to family members about my own financial goals and why I can’t lend any more money
And then try to change behaviour (the harder part)
- In talking to family members about my new financial goals, ask them about their own; what do they do to save money? Try and get them thinking about the topic
- In general take more care to talk to family members – ask them how they’re doing more regularly so I feel less guilty about my relationship with them if they ask for money
- Forget about and move on from the money lost to my older brother
Honestly, I don’t know if I can achieve the second part. But if I do the above I feel confident at least that I’ll find it easier to turn down future requests.
Left FI 
Hi, here from your MMM forum journal.
I’m sorry your family are shitty with money and inclined to take advantage of you financially. If I may make a negotiating suggestion, it would be to not tell your family that there will be no more loans before you’ve got an agreed repayment plan in place for the existing loans and the repayments have been made – it may be useful to provide the incentive of possible future loans to help get repayment of the existing ones. It’s not sneaky, it’s just helpful in getting your family where they should be.
As for telling your family about your financial position, I wouldn’t go any further than “My job isn’t high paying, I’ve got student loans to pay and my rent has just gone up by 25%, so I’m worried about the future”. A mention that your brother failing to pay rent left you in difficulties might not go amiss either.
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Hey, thanks for dropping by.
Those are really good suggestions, thank you and I’ll definitely follow both (although my job is high paying in the family context). It’s quite hard to find advice on this topic other than ‘don’t lend people money’ but your comment is very thoughtful and rational!
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Hi
Thank you for sharing this, not an easy position to be in at all.
With my family, the unwritten contract (since we were kids with our pocket money!) is that repayment of loans are strictly adhered to and paid back to the penny within a reasonable period between members of the family. No one has ever deviated from this so it’s worked but perhaps I’ve been fortunate in that respect.
I agree with @formerplayer that you don’t need to go into your financial plan, just make out that you have your own costs and expenses so you haven’t got spare to loan out, especially as people still owe you from previous loans.
It doesn’t seem fair to me that you are put in such a tight spot, that everything is an ’emergency’, such that if you didn’t lend them the cash, the negative result seems like its your fault. You shouldn’t be made to feel guilty.
Anyway, good luck with the payment plan and as this is my first comment on this blog, good luck with your journey to FIRE!
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Yes, I wish my family had this! I guess my parents never expected to be in this position/hindsight is a great thing…
And thank you 🙂 I’m just having a read of your blog too
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I think that you can forget about ever seeing the money again.
I would write it off and treat any that’s paid back as bonus. In your accounts, just cross out the debts as assets. But more importantly stop lending money and start pleading poverty and saying how your are broke. You could even say that your company has had to give everyone pay cuts to avoid firing everyone.
If you get a reputation as being someone who has money (often because you don’t spunk your’s all away) then family tend to abuse that – either deliberately or just through casual acceptance.
There’s a reason why loan sharks have a violent reputation – if you are too nice you will lose your money!
I could share a few stories about family money – nothing too drastic but in all cases, the money owed (to me) is money down the drain and water under the bridge.
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Interesting! I haven’t read all of your posts (yet), have you shared these stories or do you consider them too personal? I wonder if I’ve overshared somewhat…
Little update – I have started to recoup some of that money, which is great but I am treating it as a bonus as you and others have suggested. Treating it as a bonus has the added benefit of making me feel very unexpectedly rich (even a few extra hundred pounds seems like an incredible bounty when you’re careful with money)
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I don’t really want to open a can of worms – so I’m not planning to write about it.
Looking back, it seems a little silly to get too upset about money (although we are talking about £10k of unpaid rent – which was already at “mates rates”) – I was glad to be able to help the family when it came down to it and I can’t really say that it’s been too much to my detriment.
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That’s very reasonable. In my case in particular I actually feel like, in a way, it has been to my advantage; it made me think much more about money, and now I’m on this whole journey…
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Think you are me in a parallel universe. Everyone of your posts resonates with me. I have got into the habit of buying most of my dad’s weekly shopping even though he has more disposal income than me. I always revert to deferential daughter mode in his presence and he has always been the type to take advantage of situations, I can remember him doing it to his own mother. My sister rings me at least once a month to lend money. I cringe and get embarrassed at the thought of saying no, plus my guilt kicks in. Stupid I know.
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I’m really pleased, perhaps there are many more people like us than we realise?
I don’t think it’s stupid as such, being manipulated by people you love is tough. The guilt thing is particularly destructive, I’ve never been to therapy but I’m sure a therapist would deconstruct that. Doesn’t necessarily help in the moment when you get that call though. .. Anyway, there’s some good advice in the comments here, I hope it’s helpful. One step at a time to build confidence seems to work for me! As does writing about it, I found that cathartic
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You can perhaps ask to borrow money off them as well so they can get a sense that money may be tight for you as well. If you are of a mind to you could let them hang a bit before repaying.
Don’t get me started on guilt.
There are a number of techniques that can be used to manage requests: fudge/hedge things – be vague, don’t take cards out with you only enough cash for yourself when socialising or at family events, talk about money being tight (if people think you are going to ask for money they usually change the subject lol), ignore/change the subject, use humour to turn it round. List not exhaustive but things I use with clients and yes I am a counsellor and have had past exp with friends and lending money.
Hope it may be of some help to you
J
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These are great suggestions, although I confess I’ve already slipped up recently to help them deal with coronavirus. although I’m cooler about it in this case for various boring reasons!
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