Imagine that you have a close adult relative. In many respects, the person is like most other people, but there is one big problem. This relative is hopeless when it comes to money and personal finance.
All the money they make ends up in the wrong places. He or she hasn’t saved a penny in all of their life. Bills are constantly paid late or not at all. Their credit is at the bottom and still going down. They have borrowed money from everyone they know with promises of paying it back next time money comes in. Almost without exception, they don't repay their loans. The few times it happens, it is only after lots of reminders and pleas. Unforeseen external reasons out of their control are always blamed. It has gone on for their whole life. Over the years you have “given” them large sums of money. They have never admitted or realized the possibility that they cannot handle money and need help. Receiving someone's help to structure the economy is considered the ultimate personal humiliation. Interests, hobbies, and pleasures are always prioritized higher than food and clothing for the family. Every time a friend or family member is asked for a loan, it is motivated by a crisis, like need for medicine to a child, food for family or pets, or money to pay for electricity that has been shut off. It’s a wonder they have evaded bankruptcy all these years.
You know there is no way you can get this person to change their behavior.
You yourself have financial knowledge, a personal economy in balance, money on a savings account and income on the same level as this relative.
Except for the financial problems and the issues it causes in your relation, you like this person and get along.
What would you do next time you are asked to extend a loan for an emergency?
You could afford it even if the money wouldn't be returned, but you know it won't get their economy on track or have any long-term positive effects. Not even giving the person a large sum of money would help them long-term. They would get into the same situation again.
(Photo by Madison Kaminski at Unsplash)