Taking Over Someone Else’s Finances?

My sister sucks at money management.  Like really terrible.

I don’t understand how one girl can spend $600 at a grocery store in one month, justify having $300 set aside for a CAMPING trip with friends (who needs $300 to camp?!), literally buy a new purse at least once a month (justify this because she ”only spends $50  a month on clothes at a local thrift store”). ALL while being $1000 in overdraft, a maxed out credit card, line of credit and student lines of credit to pay for. Oh, and while she loves her career she doesn’t make a whole lot of money. This is a situation where her career makes her truly happy, shes amazing at it and it’s rewarding so lack of money is worth it, if she can manage.

We all have our money issues and reasons why we ended up in the financial situations we have, I’m no saint. I try to explain to her that she won’t need $300 to go camping for two nights and suggest she, throw $200 on debt but no, she might need that money for camping??? She had enough smarts to take my advice a few years ago and suggest, when she got a raise, to increase her provincial loan payment and pay it off in two years; yet while in a time of financial hardship during a relationship fallout, instead of calling to temporarily lower her loan payments down to the minimum (a $100/month difference), she lived off credit to make up for temporary lost income…this made sense to her.

She does not understand that paying off a credit card with a line of credit isn’t actually paying anything off. She’s an educated person but continues to money, she justifies the weirdest things. I also encouraged her to pay closer attention to her credit score but she couldn’t be bothered.

I have budgeted her many times and she’s not upheld it. She’s at the point now of needing serious hand-slapping-help before she really ends up over her head, she’s very close. I love my sister and don’t want to see her suffer financially. She has proven to me that she has no financial maturity and I feel like, as the big sister, I need to step in and take over her finances for a while to get her back on track.

I’m going to talk to her this next week, but I’m thinking about taking control and putting her on a cash budget. I’m going to play a Gail Vaz-Oxlade role and take away all her debt and credit cards (and maybe even cure them in a jelly mold). We live close enough that, God forbid, there was an emergency and she needed to get to a bank, I could give them back (with discretion, of course).

I think once she learns that she can live on cash without dying from starvation she’ll be able to takeover her finances again but for the in-term she needs a good sisterly kick in the ass.

Has anyone ever done anything like this for friends/family? What was the outcome? Any advice?

Comments

  1. What a tough situation! I struggle with my level of involvement all of the time, and have asked for the same advice in the past. Here’s what I’ve learned:

    When you mix family and money, you’re putting a very important relationship at risk. I can tell that this is something you’re very passionate about (like me), and if your sister doesn’t follow through, you’re likely going to take it personally. Your sister’s relationship with her money shouldn’t be a breaking point for your relationship with her. And more often than not, it can end badly.

    It sounds backwards, but because you love your sister so much I would encourage you to let her learn from her own mistakes. She has an incredible resource and sister to turn to when she hits her tipping point, and she likely knows that. But she’ll do it when she’s ready. It’s not something we can force, as much as we’d like to.

    If I can offer a word of advice, literally a word, it would be “don’t”. Don’t take over a family member’s finances. DO help them create a budget. DO teach them what you know and share your knowledge. DO be there for them if they mess up. Help them get set up, and then take a step back and see what happens. If they don’t succeed, it’s got absolutely nothing to do with you, so try not to take it personally.

    Those are my thoughts on the subject. Hope you’re having a very happy thanksgiving with your family!!

    Christi

    • Catherine says:

      Thanks for the advice Christi, I will chat with her and see what she wants to do. I can’t see myself ever getting so involved it would screw her up in any way and if she ever wanted to stop I would do it. I’m more thinking give her a few months where she learns how to live on a realistic cash budget and then teach her the skills she needs to take control. She’s so scared that she won’t be able to live off say 200/month on food she won’t even try.

  2. Family and money/money management can be a tough issue. I’ve tried a couple of times with different family members, but you can only do so much. I had one family member say, why would I want to budget…IF I have money at the end of the month then I am great. So, we basically just agreed to disagree.
    John S @ Frugal Rules recently posted..I’ve Joined the Yakezie Challenge!My Profile

    • Catherine says:

      Yeah it’s true, like I said to Christi i’ll chat with my sister and see if she’s game. If not, I tried!

  3. Whew…what a great question and what a tough situation. Speaking from experience, both personally and having coached people over the last 3 years: sometimes you just have to let people fall flat on their face before they learn the lessons. I know that’s how I had to learn and therefore the reason I’m in the financial industry and created a blog.

    It’s also what I needed to experience to teach me why I need to be responsible, live on a budget, avoid (and pay down) debt, and invest for my future and stash away savings.

    I could be wrong…but I don’t think forcing somebody to do something is the best way to go. I’d love to know how it turns out if you do force her to go on a cash budget and manage everything for her. It would be very interested to see if it works and see if she becomes resentful of you.
    Jason recently posted..Blog Income and Site Statistics – September 2012My Profile

    • Catherine says:

      I know you’re probably right but it’s infuriating to watch her knowing I can help. I don’t know what will happen if she does falls flat, it’s like trying to avoid a train wreck. I think she and I need to talk and maybe if I really point out the realism again it will be enough. I will let everyone know how it goes!

  4. Tough! I can definitely sympathize. My parents are terrible with their money and have refinanced themselves into debt hell. Let’s just say that their debt is about twice the value of my Vancouver condo. :S I don’t even know where to begin to get them back in financial shape. I think it’s great that you’re able to talk with your sister and try to help her. With my parents, I’m limited to making suggestions and helping them out with money when I can – anything else and they shut down. Sigh.
    CF recently posted..Hey, I got a new job (again)My Profile

    • Catherine says:

      Parents would be really tough! I feel like I can get away with it with my sister, siblings are different. Hope your parents find help somewhere!

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  1. […] Taking Over Someone Else’s Finances? on Plunged in Debt […]

  2. […] talked before about helping my younger sister with her finances. I even toyed with the idea of actually taking over her finances since she was in such a mess, but ultimately I decided at 26, she should probably just work it out […]

  3. […] you have family members who are bad with money?  I sure do, and it can be really hard to figure out a way to help them.  Over at Plunged In […]

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