Money Rehab with Nicole Lapin - How to Ask a Family Member for Money…

Episode Date: October 14, 2021

…and why you should avoid it at all costs. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. Life can feel chaotic when you're struggling with money.

And who do you normally turn to in times of chaos? Your family and friends. They're always supposed to be there for you, right? Well, emotionally, yes. But financially, that's a much bigger question. Today's listener wants help answering that question for herself. Here she is. Hey, Nicole. My name is Emily, and I'm a big fan of the show. I was wondering if you had any advice about asking family for money. I'm about to move, and I'm about 600 short of all the security

deposits, first month, broker's fee, payments I need to make. I want to ask my parents for the money, but I'm not quite sure how to go about doing it. Help. I can definitely give you some advice on asking a loved one for money. But before I do, Emily, are you sure you want to do this? Asking for money from anyone can put a knot in your stomach for sure. It's uncomfortable and it makes you feel vulnerable if you're asking someone you know. But beyond feeling awkward, you could get doubly screwed by hurting your relationship in addition to your money. It's one thing to piss off your creditor, but it's quite another to put someone out you care about. When I was a baby green reporter

making below minimum wage, I borrowed 400 bucks from a close friend to buy a dining table. I didn't have one and I was sitting on the floor with questionably edible Thai takeout and a bottle of two buck chuck, two dollar wine from Trader Joe's. If you don't know, now you know. That became depressing. I promised I would pay it back in two months, but it took me four months and I wasn't willing to give up my cheap wine for my own sanity to get it back sooner. Well, I did pay it back, but it was beyond awkward until then. Ten years later, my friend still gives me a hard time about it. I mean, please, who wants to be the butt end of that joke forever?

Not moi, probably not you. There's a saying I used to use a lot. Before borrowing money from a friend, decide what you need most, the money or the friend. I know it's grim, but it reflects the reality of what ends up happening most of the time when you borrow money from family or friends. The truth is there are few things that constrain a relationship as much as money. Do you remember episode 21 where we had a listener who talked about the pitfalls of having her dad help her out with her taxes? She said that lifting the curtain and giving her dad complete transparency

into her finances led to a lot of judgment and unsolicited advice that hurt their relationship. Despite the drawbacks, it is really tempting to ask loved ones for help because they're the ones who've got your back no matter what, right? Chances are, for that reason, they will lend you some cash. You think, hey, I'd do it for them. But if you can avoid it on both ends, taking money from a loved one or giving money to loved ones, I'd highly recommend that you do that. And Emily, I want you to be in your dream home just as much as you do. But I have to tell you, I am not sold on whether this apartment is in your budget. Typically, if you're having issues making rent before you've even moved into

the place, that is a bad sign. If the monthly rent is more than you can afford, it will probably take you longer to pay your parents back than you think. Are you okay with that? Will your parents be okay with that? Be really, really honest. However, I understand that there are some instances in which you are in a bind and asking to borrow money from family is a better option than borrowing from a bank. After all, even though your family may hurt your ego, they can't hurt your credit score. So how do you get loved ones to cough it up without compromising your relationship? Here are my four biggest recommendations. Number one, talk about it in person. Do not text,

do not email, do not call. It's all too easy for faceless communication to be taken the wrong way. We know this. If you can't meet in person, opt for a FaceTime or a Zoom call. Essentially, I want you to be face-to-face in some capacity. If you're talking over text or even just a regular phone call, it can be too easy to forget who you're talking to. Exchanging money is a transaction, but you don't want your relationship to feel transactional. So make sure you're keeping things human.

Number two, be specific. Ask for exactly the amount you need and explain why. Say, parents, my rent is $1,200 a month and I need to pay first month's rent and a security deposit of one month's rent. On October 20th, I need to pay $2,400, but I only have $1,800 and I don't want to dip into my savings or emergency fund for the remaining $600. Or something of that nature. I'm making those numbers up, but you get the idea. If you're asking someone for money, especially when

people you're asking are your parents, they'll want to know what that money is being used for. Odds are, if they're helping you close on an opportunity they want for you, they'll be extra motivated to help. Or honestly, they may say no if they think you're making a big financial mistake. Either way, they do deserve to know so that they can make their decision factoring in all the information. Number three, make a plan. Put yourself in your parents' shoes for just a moment. One of the most daunting aspects of lending someone money is the prospect that you may need to remind them and then remind them again and then again to pay you back. You want to reassure your parents that you will pay them back by telling them when and how to expect their money back.

Give them the date that you are absolutely sure you will have the $600 to pay them back and ask them how they would prefer to be paid back. Check, cash, Venmo, you know the drill. Be sure you're allowing your parents to articulate their preferences to you. Do they want all the money back in a lump sum? Would they rather you break the $600 into installments so that they can start getting paid back earlier? Do they have any big purchases coming up and need some money back to help shoulder the hit to their paycheck? By taking some extra time to understand their needs, your parents will know you're taking this loan very seriously and approaching it thoughtfully. Number four, embrace the elephant in the room. If you feel weird

talking to your parents about money, you can tell them that you feel weird talking to them about money. You can say something like, this conversation is difficult for me and it makes me a bit anxious to ask you for anything, especially because you've already done so much for me, dear parents. I know that money is complicated and borrowing money can sometimes get sticky. So I just want to make absolutely sure that you know that our relationship is my number one priority. If there's ever an issue with the arrangement we're making about this loan, please tell me right away so that we can talk it through. You'll be surprised how much smaller you can make that elephant in the room just by acknowledging its presence. For today's tip, you can take straight to the bank. If you're in a situation

where you're considering asking to borrow money to make a purchase, ask yourself, do I want this enough that I am willing to risk straining a relationship? In most cases, I think you'll find that the answer is no. Like I alluded to earlier, Emily, before jumping in and asking your parents for a loan, you should ask yourself if you think the apartment is something you can actually afford. I know you probably have that apartment listing bookmarked already, but I think you'll find that the satisfaction of affording a place on your own feels cozier than living in one above your budget. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab

team Michelle Lanz for her development work, Catherine law for her production and writing magic and Brandon Dicker for his editing engineering and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.