You’ve built substantial wealth through years of hard work and smart financial decisions. With your status, it’s easy (even common) for family and friends to ask for financial assistance.
For many high-net-worth individuals (HNWIs), these expectations/requests can feel overwhelming. Regardless of how it occurs for you, you need to have thought through how you will handle these conversations.
In such situations, it is essential to establish financial boundaries and have a philosophy to lean on so you are not caught off guard. Are you prepared for these conversations? Have you decided how you want to handle these conversations? It can be very helpful for you to have thought through your position on these situations!
You CAN Say No and Still Leave The Person With Love.
This may be the most important thing to understand and get out of this entire article. You will get what you set up in these conversations! If you set up that you are frustrated, bothered, or disappointed with the request, that is what you will leave people with. It could be a negative experience for both of you and be damaging to your relationship.
However, these conversations can also be empowering, filled with love, coaching, service, and grace. It is entirely up to you to decide who you want to be in these conversations.
Language matters! Think through who you want to be in these conversations, and how you DO want to show up, and how you DON’T want to show up. If you haven’t thought this through, you may encounter something in a way you had no intention of doing.
The whole point is to create clarity for yourself on how you want to show up in these conversations. Over my lifetime, I have decided that I want the person to really get my love and commitment for their success, even if I decide not to “lend” or gift them money, and certainly if I do lend or gift them money. To say that another way, I’m committed to the person asking for money or a loan to really get that I love them, I want them to succeed, and I am willing to help – even if it’s not giving them a loan or money.
If you are willing to let some aspect of this guide your conversation, I can assure you that the conversation will go much better.
What Are Financial Boundaries and Why Do They Matter?
Financial boundaries are the limits you set around earning, spending, and giving money. Instead of being restrictive, this approach ensures that your financial choices reflect your personal and financial goals. Without boundaries, money can become a source of strain, leading to resentment, strained relationships, and even compromised financial stability.
Clear boundaries empower you to make thoughtful decisions that align with your values, investment philosophy and life priorities.
How HNWIs Can Set Financial Boundaries
When you don’t establish clear boundaries around money matters, even the most well-intentioned decisions can result in emotional or financial strain. Here are some proactive steps you can take:
1. What is your primary goal with your money?
With each client, we love talking about this. Aligning your core beliefs with your purpose for money is very important. Money is an enormous part of each of our lives. If you are unclear about your intentions and purpose with money, how can you possibly make excellent decisions with money?! Ask yourself:
- What matters most to me? (Set money aside for a moment as you answer this one).
- What impact do I want to have?
- What role does money play in my priorities and my impact?
- How much money is “enough?”
- What purchases or experiences actually bring you joy and meaning?
- What are your primary goals around/with money?
- Can/does money play a role in creating more or less freedom for you?
Getting very clear on all of this (and if you have a spouse/partner, get clear on this together) can help you set your “True North” with your personal/family philosophy around money!
When your financial boundaries align with your core values, making decisions that feel right becomes easier. This will have you making decisions you won’t regret or question.
2. Set clear boundaries with family and friends
Financial expectations from family and friends can be one of the most challenging areas to manage. However, being transparent about what you’re comfortable contributing is critical.
For example, you must have clear terms for assisting family members, whether with a one-time gift or a structured loan. Avoid creating dependency by setting limits that protect your finances and relationships. A written agreement might be necessary for larger financial contributions to maintain clarity and avoid accountability issues in the future.
Don’t enable! If your contribution does not help the person stand taller for tomorrow, being more likely to be self-sufficient, you are likely enabling, not lifting. Be careful. Restructure the support to help them stretch, increase wisdom and work harder, not less.
3. Don’t disclose your financial situation
Keeping your wealth private is a simple but effective boundary you can set, as people could make unsolicited assumptions or demands when they are aware of your financial situation. Use discretion by avoiding needless reasons or explanations for your financial decisions.
The fewer people who know the full extent of your wealth, the less likely it is for you to be targeted for unsolicited financial requests. By maintaining privacy, you protect your financial autonomy and minimize external pressures.
4. Develop a framework for handling financial requests
You probably receive numerous investment pitches from loved ones. These proposals should undergo due diligence; otherwise, you may find yourself incurring losses from such financial favors.
To mitigate emotional decision-making, you need a structured approach to managing financial requests. Consider creating a decision matrix that assesses factors such as urgency, alignment with your values, and the potential impact on your financial plan. Then, you can evaluate requests objectively and communicate your decisions confidently.
5. Consider Saying, Yes.
You don’t have to say yes. However, I’m suggesting you don’t completely rule out a yes. Creating and managing wealth has its complexities, and you certainly have a responsibility to be wise with your money. However, if you have an abundance of wealth, it can be highly rewarding to help people – to use your wealth to lift those around you, at times. I prefer to do this anonymously – I feel it allows me to help without creating the fanfare and noise that I’m uninterested in and, in my opinion, reduces the possibility of the person returning with additional requests.
I have seen this be a powerful help for those around me that have fallen on harsh circumstances or who have big life goals or aspirations they need help with.
The point is to be open to a yes, if you can help without compromising your own financial resilience and without enabling a person. You can still build generational wealth and offer financial assistance at times.
Consider Financial Support Without Being Asked
Years ago, a sibling of mine was in a tough spot and was struggling with a financial situation. She wasn’t broke, she wasn’t poor, but for her, it was tight and tough.
Without her asking, I stepped in and provided some support. It’s one of the best decisions I have ever made. This sibling really got that I love her and that I wanted to be there for her when she was going through something. I realize there are a whole host of opinions on this, but I’m telling you, I am so glad I did that. I want to be someone who can perceive pain and struggles, and who is willing to show up. “Let me know if you need anything” is often a huge copout! If you really want to help, don’t wait for someone to ask you directly; jump in!
I have never known anyone to jump in and offer support (whatever that looks like) and regret it. It’s almost always a reverent moment between friends and family, and a core memory for anyone involved!
Conclusion
It’s likely that if you have amassed wealth, some of those around you may ask for a loan or for financial support. Get clear on your purpose for money, your investment philosophy, and prepare yourself for those conversations so you are never blindsided! Lastly, take on the challenge of leaving people feeling seen, empowered and “big” – not small in these conversations. Often, that can be the greatest gift you provide your family or friends.
A financial advisor can help you tailor a goal-based, result-oriented wealth management strategy. There are a whole host of benefits to working with a financial advisor. Because we deal in these types of conversations every day/week, we offer a lot of coaching on anything around money.
Each client creates their own approach, has their own conversations and incorporates their own goals in a financial plan; to say that another way, this is your plan! However, having some guidance/coaching around money leaves our clients making very informed decisions. We are pulling for the best outcomes with each client, and we are proud of the reputation we have earned in this space. A quick Google search shows what our clients are left with in working with our company, and we are very proud of that.
Our clients are brilliant in their own space. Together, we can help create a resilient and intelligent financial plan to help you build and secure your wealth!
Discover how Tencap Wealth Coaching’s financial planning services can help you take charge of your finances as we break down 7 Reasons Why Our Advisory Services Are Worth the Fee.
Disclaimer: The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Utah or where otherwise legally permitted. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Moreover, this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.
Nick Carrigan
Nick trains and develops families in creating, maintaining, and growing wealth. This includes educating clients on the science and academics of investing, comprehensive financial planning, and ongoing coaching to ensure discipline for a lifetime. Nick has seen this create incredible levels of freedom, fulfillment, and love for the families he works with.
