What’s the Best Way to Help a Family Member in Financial Straits?

When a family member or close friend needs financial help, your first instinct may be to do whatever you can to ease their pain.

But instead of handing over cash or a credit card, financial experts say it’s important to look at your own finances first.

“It’s an emotional choice,” says A.B. Ridgeway, a certified private wealth advisor in Lafayette, Louisiana. “Let’s step back and make sure we protect ourselves, too.”

Here’s how you can help a loved one who needs aid without damaging your own financial stability:

“Start with knowing your own numbers,” says Emi Gjini, a certified financial planner and founder of MyGen Planning in Chicago. “Check your own budget and savings. Make sure your emergency fund and retirement contributions are on track.”

Once you know where you stand financially, you can evaluate how much you can help someone else.

“Pick an amount you won’t miss,” she suggests — so you don’t derail your own financial goals and progress.

You still want to be able to cover your own emergency expenses if you suddenly were to lose your job or face an unexpected cost.

It’s usually simpler to offer a cash gift, Gjini says. The other option is to lend money, but the stipulations of how and when a loan should be paid back can get complicated among friends or family.

A cash gift may also make it easier for you to plan ahead because you won’t expect the money back. Waiting to be reimbursed can be stressful and delay other financial choices, she says. (Individuals can give a gift of up to $19,000 per person in 2025 without tax consequences.)

What if your loved one wants help borrowing money from elsewhere? Try to avoid co-signing for a loan with a family member, says Mark Reyes, CFP and founder of Casita Financial Planning in Los Angeles. If your family member misses or delays payments, your own credit score could take a hit.

“If you’re in the process of making a major purchase for yourself like a home or car, then you could jeopardize your ability to secure a more favorable interest rate,” Reyes says. That’s another reason why gifting cash can be less risky than sharing credit.

If you are giving money that you expect to be paid back, Ridgeway suggests spelling out the details of the agreement in writing.

“I would recommend a contract that spells out terms and conditions,” he says, adding that you can find an agreement template online.

“When dealing with money, there’s a lot of ‘he said/she said,’” Ridgeway says. Writing down an agreement can help clarify the terms for each participant.

Another benefit? If they don’t pay you back, you could potentially write off the debt as a tax deduction because the loan is in writing, Ridgeway adds. Checking with a tax professional about your specific situation is also a good idea.

Sometimes, the best way to help a family member is to give them non-monetary forms of support, Ridgeway says. That might mean offering to listen, referring them to a job network or helping them sign up for unemployment.

“Sometimes practical methods of helping a struggling family member, like looking at their LinkedIn profile or resume, can help them more than giving them $100,” Reyes says.

You could offer to buy their groceries for the week to ease the burden without making a major financial commitment.

However you decide to help, set clear boundaries to prevent the assistance from ballooning out of control.

Enforcing limits on the ways or amount you can help them “doesn’t say you love them less but it does hold them accountable for their situation,” Ridgeway says.

Otherwise, he warns, people may take advantage of your goodwill.

Gjini says that it’s important to make sure you aren’t just enabling a person’s poor financial choices, but that you’re helping them get on a better path.

“Focus on long-term solutions. Ask yourself, ‘Will this help my sister move forward? Or will it enable a cycle?’” Gjini asks.

Setting clear boundaries will “prevent love and money from clashing,” she adds.