financial planning | Money and relationships: During coronavirus, here's how to help others without hurting your finances (2024)

The crisis and chaos resulting from Covid-19 have upturned many people’s finances and it’s likely that a friend or family member has fallen on bad times. If they seek financial help from you, what should you do? It can be a moral dilemma because in a crisis of this scale, it is impossible to say no, but you also want to keep your own finances secure given the prevailing uncertainty. On the other hand, some people might want to take advantage of the situation and drain you of your resources. How do you tell the difference? Here are some things you can consider before taking a decision so that it does not affect your finances or relationships.

What’s your financial status?
If your job is relatively secure, you are getting a regular salary, and have an emergency fund to help you tide over the crisis, you could consider providing help. If, on the other hand, you are anticipating a job loss or a cut in salary, you will first need to assess your own situation. Do you have enough spare funds to last you at least the next six months, or till the crisis clears up, or till you find another job? If not, refuse politely. If your funds have dried up temporarily because you are finding it difficult to access resources, say, retrieving money from the ATM, it might be wiser to delay help. If you are confident about your cushion and future salary, please go ahead and help.

Who has asked for help?

If it is a close family member or friend who has never before sought help and is hesitant to ask even now, they are probably facing a genuine financial crisis. In such a case, do help even if it means sharing your scant resources with them. If, however, it is someone you do not know well enough and the person is vague about why he needs the money, it’s best to avoid. If it is a friend or acquaintance who is known to be reckless with money and has a history of taking loans, do not indulge.

What is the money for?
If the person has lost his job and needs the money for a medical emergency, purchasing essentials, paying an EMI or premium, don’t hesitate to help. In the latter case, however, make sure bailing the person every month doesn’t become a habit. If the money is not really for an emergency, hold it. The quantum of money required by the person is also crucial since in the current scenario it may not be advisable to lend large sums of money and risking your own finances. If the need is grave, offer staggered help. Besides, repayment of a large sum may become problematic if the person’s financial condition doesn’t improve. If the sum is small, do provide help.

Are there other options?
If you cannot afford to help the person financially, suggest ways he can monetise his assets so that minimum exposure or trips to financial institutions are required, and can preferably be conducted online. He can take loans against securities, insurance policies or gold; use credit card to meet an emergency, or if nothing else helps, take a personal loan.

Should it be in writing?
In India, it might seem awkward to ask your friend or family to sign an agreement if you offer a loan. More so, in the current financial situation. However, if you are giving out a large sum, be it to family or friend, it is advisable to have the transaction in writing. If the sum is small and you are willing to write it off, you can avoid the agreement.

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All of us have been in a financial dilemma when it comes to relationships. How do you say no to a friend who wants you to invest in his new business venture? Should you take a loan from your married brother? Are you concerned about your wife’s impulse buying? If you have any such concerns that are hard to resolve, write in to us at etwealth@timesgroup.com with ‘Wealth Whines’ as the subject.

Disclaimer
The advice in this column is not from a licensed healthcare professional and should not be construed as psychological counselling, therapy or medical advice. ET Wealth and the writer will not be responsible for the outcome of the suggestions made in the column.