“From a positive psychology standpoint, we should look at setting financial boundaries as a way to cultivate our capacity to say ‘yes.’” – Michael G. Thomas Jr.
Financial boundaries are the limits and rules you set for yourself related to spending, giving, and lending money. They protect you from emotional and financial harm and allow you to reach your financial goals.
Do I Need Financial Boundaries?
You might need to set financial boundaries in your relationships if any of the following are true:
- you get into fights about money
- you find yourself being passive-aggressive with friends and family about money
- you are repeatedly asked for financial assistance by the same person or people
- you have physically unhealthy responses, such as racing thoughts or lack of sleep
- you find yourself wanting to control what the people you lend money to do with it
Where Do I Start?
Here are some examples of financial boundaries:
- set a limit on the amount you spend on gifts for holidays and birthdays
- do not lend money to family
- never expect repayment of money lent, regardless of what someone says, but view it as a gift
- require rent and utility payments if a family member is living with you
Here are 6 ways to establish financial boundaries:
- Identify your financial goals. If you don’t know your financial goals, then you won’t have the ability to say no to circumstances outside your goals. Financial goals might include anything from traveling more to saving for retirement. The actual goal is less important than knowing what that goal is and making progress toward it.
- Create a budget. The first step after setting financial goals is to set a spending plan that will allow you to move toward that goal in a measured way. This will also help you say yes or no to things that aren’t inside your budget.
- Communicate your financial boundaries as soon as possible. It will be hard to maintain your boundaries in the heat of an argument. Talking about them before a conflict arises is the better choice.
- Say no gracefully. It doesn’t help anyone to be abrupt or rude, so frame your no in a personal context. Discuss the reason for declining the request in terms of your financial goals and boundaries. It will help soften the blow.
- Have a plan for lending money. This plan could range from viewing it as a gift to drawing up a contract for repayment. Know ahead of time what the expectations are for any lending that you, and communicate those expectations to ensure there are no surprises.
- Be prepared for pushback. Your boundaries will be surprising and frustrating for those who are used to you saying yes, particularly if you’ve been someone who has not had them in the past. It will be helpful for you to think about the conversations that might take place in advance and prepare answers.
Learning to set financial boundaries will benefit you in the long run. While they may be difficult to maintain at first, it’s worth it to take the effort to put them and keep them in place.
©2023 Amplified Life Network
