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We tend to think of money as a broadly positive thing. The more you have, the easier things become.
Or so the thinking goes. While having money can remove certain problems, it can also create new ones — and sometimes, they’re the problems that you would never expect to be dealing with. In the wrong situations, money can negatively impact family dynamics. You might think that your extended family is rock solid, but throw money into the equation, and you might find that the relationship isn’t as immune to harm as you thought.
You can’t always avoid money issues (or having more of it come into your life), but you can control the impact it has on your family. Let’s take a look at a few handy strategies that can help ensure money is never a source of conflict or anguish in your family.
Be Cautious About Loaning Money
Money and family are famously tricky. As a general rule, it’s best to avoid loaning money. Any money that you give to a family member should be considered a gift. If that’s not possible, or they insist that they pay you back, then draw up a contract that outlines the payback requirements. The number one reason family members argue about “loaned money” is misunderstanding; one person (usually the person who lent the cash) believes that they could pay the loan back whenever, while the other person (typically the one who gave the money) thinks it should be paid back promptly, or at least before other expenses.
Managing Inheritances
It’s difficult enough to deal with the loss of a loved one without also falling into disagreement with your loved ones. Alas, that scenario is an all too common scenario. For example, when siblings are in conflict about the inheritance left to them by their parents. In this scenario, it’s nearly always best to hire probate lawyers to manage things on your behalf. Inheritance-related matters can be complicated even when things are running smoothly; they’re outright stressful when things aren’t straightforward. Working with an experienced lawyer will ensure that your corner is being fought without you having to go through the stress of dealing with other family members.
Avoiding Issues with Family-Run Businesses and Investments
Family businesses can be a great way to unify talent and build generational wealth, but they do pose potential problems. For example, what happens when everyone is enthusiastic about the business at the beginning, but then only one or two family members end up doing all the work? As with all things business-related, it’s best to draw up formal agreements about who’s responsible for what, how much equity each family member has, and what salaries everyone receives.
Respecting Everyone’s Economic Position
Finally, remember that even families that keep their money matters separate can run into issues if there’s a major gap between how much everyone earns. In general, it’s best to let the economic situation of the least wealthy person guide family get-togethers — planning an expensive ski holiday will only create resentment!
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