Amid rising inflation, interest rates and recession worries, money is getting tighter for many folks — and probably for you. Yet there may be charitable organizations you want to support, friends or family asking for financial help and things you want to buy for yourself. It’s possible to do these things even on a limited budget. But if you want to be responsible with your money, you have to know where to draw the line.
When is it OK to put your own interests first? Use these criteria as guidance.
WHEN YOUR FINANCES ARE AT RISK
Think carefully before spending any amount of money on somebody else, whether that’s $20 or $2,000. Will it jeopardize your ability to pay bills or save for emergencies? Picking up the lunch tab for a friend or helping put your kid through college shouldn’t come at the cost of your own expenses and goals.
A crucial part of this assessment: Assume you’ll never get the money back. There’s no guarantee your loved ones will repay you, no matter how well-intentioned they may be.
“If you can’t afford to give it as a gift with no expectations on your end, then you can’t afford to help,” says Lacy Rogers, a certified financial planner in Fort Worth, Texas.
Saving toward a “giving budget” in a designated account can create a clear separation for your spending, says Valerie Rivera, a Chicago-based CFP. If you don’t have enough funds in the account, that signals that you can’t spare the money.
YOU FEEL PRESSURED TO PAY
You’re not required to hand out money even if you have the means to be generous. You have the right to say no when you feel stressed or uncomfortable. Don’t let others talk you into something you’ll regret.
Saying no can be challenging, especially when dealing with family or a close-knit community. Senses of guilt and obligation often cloud judgment. Your mother raised you, so the least you can do is pay her credit card debt, right? Not if it enables her to repeatedly overspend and turn to you for money.
A lot of people who are the first in their families to come to this country or go to college “can really quickly become other people’s financial safety nets,” Rivera says. That’s a heavy burden to bear.
Having conversations about finances with loved ones early and often helps set expectations. “It’s totally OK to reestablish or establish for the first time what money looks like in discussion with friends, in discussion with family,” says Kate Mielitz, an accredited financial counselor, or AFC, in Tumwater, Washington.
Take time to process each money request that comes your way. Consider passing if you’re concerned with getting taken advantage of or supporting harmful financial behavior.
YOU CAN HELP IN OTHER WAYS
Supporting the people you care about doesn’t always have to cost money. Your time, skills and knowledge are valuable too.
Say you have an elderly neighbor you used to purchase groceries for. “Maybe you can’t buy their groceries for them anymore but you can help them out with the yardwork, and maybe that eases the burden on them in a different way,” Rogers says.
If you’re unable to pitch in personally, point your loved ones in the direction of those who can. “Familiarize yourself or help your friends and family familiarize themselves with resources in the area — if that’s a food bank, if that is secondhand clothing, if that is job services or resume help that’s in the community — to help them move forward and get a stronger foot up,” Mielitz says.
Visiting 211.org is one way to find assistance with basic necessities like paying utility bills or accessing food. For people who want help managing their money, Mielitz recommends setting up a free virtual appointment with an AFC through the Association for Financial Counseling & Planning Education.
YOU’VE SET ASIDE MONEY TO TREAT YOURSELF
Taking care of your needs and goals (and giving to others) is important. But everyone deserves a little fun, too.
“We’re human and we need balance. We can’t only save for later and not enjoy life today,” Rivera says.
If you have discretionary money, don’t spend it all on others. Leave room for self-care, entertainment or whatever brings you joy.
“A lot of times, we use money to find ways to enhance our mood. Whether that is dining out or going out for a drink with a friend or buying a book,” Mielitz says. “But you’ve got to put together a spending plan and know what you have access to, because there are times when we don’t have the money and we spend it anyway.”
Regularly setting aside funds or shuffling expenses around can give you the flexibility to splurge on yourself without hurting your finances. If you can’t find extra money, make use of resources such as the free session with an AFC. An expert can help guide your dollars in the right direction.
“Life in general is a series of trade-offs,” Rivera says. “So it’s picking and choosing, what really is going to add value to your life?”
NerdWallet: Budgeting 101: How to budget money
Association for Financial Counseling & Planning Education: Find an accredited financial counselor
Lauren Schwahn is a writer at NerdWallet. Email: firstname.lastname@example.org. Twitter: @laurenschwahn.