Too many times in family communities across the country those who have become comparatively financially successful are unknowingly volunteered to become the "universal provider" within their family circle. I should stress the word "comparatively," because many times those who are more successful within a family are also having their own financial problems, but because they do not exhibit the same signs of struggle as other family members, often they are viewed as "well off." The universal provider is constantly hit with requests for these short-term loans that should never be called loans, because somehow they are never repaid. These pleas for assistance from family members in need, affectionately known as Ray-Ray, sound something like this:
"I am a little short on rent this month... can I borrow $500 until I get my tax return?" (Which never comes.)
"I was laid off from work again... can I borrow $2000 until I can get back on my feet again?"
"I was evicted from my apartment... can I stay in your place rent free until I can find another place to live?"
I am not saying that people should not help others; however, it is time for us to speak candidly about how we are helping our close friends and family members. If you constantly find yourself in the role of the "universal provider" issuing "loans" that are never paid back, then my argument is you are not helping anybody at all. You are enabling their dependence upon you, as opposed to helping them develop their own ability to sustain their economic well being. Furthermore, many universal providers are suffering from their own economic hardships and this irresponsible giving can precipitate their economic demise as they squander the precious few dollars they had stored for living expenses, bills or even retirement and other important long-term goals. So for the universal providers out there, here are three tips as to how you can maximize the resources in your family:
1. Use a creative promissory note -- Make sure that every time Ray-Ray asks you for a loan there is a written agreement before funds exchange hands. This agreement is to outline the terms of the loan, such as how the loan will be paid back, the timeframe of the loan, and conditions if the loan is defaulted. The agreement is to be signed by both parties. Do not be afraid to enforce this agreement in a court of law. I understand this can feel cold, but it is even more cold if Ray-Ray does not pay back a debt and you find yourself in a financial bind. You don't have to request to be paid back in monetary terms, but perhaps an exchange of man hours applied to household chores, errands for your business, or even community service hours donated to your favorite local nonprofit.
You can also request to be paid back with documented proof of Ray-Ray's efforts to improve his or her condition. Proof of enrollment in the local community college, evidence of a completed website to his or her new business, a written letter from a GED program to complete a high school degree, copies of completed job applications... all of these are evidence of tangible tasks that this individual is actually doing work to improve their economic condition. If they are not able to provide this proof, then it is time to take them to see Judge Mathis! The bottom line is there must be a measure of accountability. Without accountability, Ray-Ray will continue to tap your financial well until it runs dry, leaving you both penniless and dependent upon the next family member to waste their crucial financial resources.
2. Have a family empowerment meeting -- One of the most powerful financial support systems within our communities, if we are efficient and not irresponsible in how we utilize the resources, is the family. I think we take for granted how powerful the family is. Families are great at meeting for Easter, Christmas, weddings, funerals, reunions and other normal gatherings; however, what if the family could meet specifically to have economic empowerment discussions?
I have hosted many family meetings where we are able to seek and find the necessary empowerment resources within the family. Pull all the members of the family together, including immediate, extended, and close friends who are just like family. Have an independent person who knows a bit about finance host the discussion (preferably someone you can trust to not think of this as an opportunity to make a sale) and answer direct questions such as the following:
• How many people are unemployed and within what fields do you have an expertise or skills? Have someone take notes of those who respond, then follow up with the question, "Do we have anyone in those particular fields that can assist with a connection or resource to assist?"
• Do we have any children who are going to college, and can we all agree to establish a college savings fund in a 529 account in which we pool funds for those youth going to school?
• Is there anybody who is in jeopardy of foreclosure or being evicted? Can we set up a roommate situation to save the home or pool funds for a mortgage in return for in-kind services rendered?
• Do we have any current or future entrepreneurs in the family who need support, and can you outline exactly the type of support you will need from the family? Is there a possibility to turn any of these business ideas into family run businesses by which we all can profit?
3. Say No! -- If you don't have the money, guilt is not a good enough reason to try to come up with the money. Learning how to say no is one of the easiest yet most difficult things we need to do in our community.
If you really want to help somebody, putting them in a position where they can help themselves is the most effective way of providing assistance. Giving them money is just putting gum in the hole of the dam, which may seem to stop the leak temporarily, but only leads to a larger crack and ensuing flood when the dam breaks, which hurts everybody. Tough love must be tough, but it must be balanced by love, so don't ever turn down a chance to help those you love. Find a way to help that will lead to true empowerment and all of your family will be stronger for it in the end!