How should you respond to someone asking for money?

Previously, I have written about saying “No”, to certain situations here and here . I personally believe that offering people money when they can’t make ends meet doesn’t always help them. Short term we may eliminate the immediate need, but we don’t address the real problem by simply giving them money.

Recently, I came across another post dedicated to saying “No”. Joe, over at Personal Finance By the Book lists five reasons saying “No”, could help more than simply throwing money at the situation. I think Joe has a great list of reasons

Let’s define help

I think for most people, the reason we have problem saying no when people ask for money, is we see the money as a way of helping. Sometimes that is true, but it can also lead to enabling of bad habits and decisions. If we really want to help we should work with the person to understand why they are in their current situation.

If the problems are due to some unforeseen circumstance, then helping with a monetary gift may be the right answer. However, if the current situation is simply the result of habitually making bad decisions, then why should we thing that giving them money will really help?

I think we can all agree that real help should work to eliminate the cause of the problem, not the symptom of the problem. For most, the cause of financial problems isn’t the lack of finances, it is the poor decisions made in the management of the money that is available.

Offer “Real” Help

Alright, so you agree that giving your friend (or family member) $250 to keep the electricity on only addresses the symptom. What can you do to help them fix the problem? What can you do to really help them?

First, I think the best thing you can do for anyone needing financial help is to maintain strength in your own finances. You really may need to offer some money to address the current crisis, but if you are having problems staying afloat, then you won’t be able to help.

Second, understand that you can only truly help someone if they desire to be helped. You may have to explain your definition of what it means to help someone. This will be very difficult the first time you decide to draw a line with handing out money. I recommend you fully understand the pressure that you will be facing when telling someone that you won’t give them money. If they get upset and ugly and refuse to look at the cause of the problem, chances are they don’t really want help, they want a hand-out.

Finally, when you decide that you aren’t going to be putting money into the situation, give them something to think about. Explain what you are doing to become a better manager of your own resources. Volunteer to sit down with them and work out a budget, or if you don’t feel comfortable with offering them help, have names and/or email addresses of people you trust that do have the time and training to help. Maybe you can offer to help pay their way to take a Financial Peace University class.

Final Thought

Whatever your situation, eventually you will be asked for money to help someone out of a tough situation. Before that day occurs, decide how you will handle the situation. Will you be guilted into giving someone money, without addressing the real problem? Or, will you offer advice in a loving and compassionate way that truly identifies the real problem and then give of yourself to help them correct the problem?