While setting boundaries around money can be a daunting task at times, doing so can help put you on the path to financial wellness.
If you’ve been struggling with setting (and sticking to) financial boundaries, there’s no better time than the start of a new year to get into the habit.
What are the financial limits?
“Money boundaries are boundaries that you set to protect how you feel and to protect your money,” says Aja Evans, a mental health counselor and financial therapist in New York City.
Financial boundaries allow you to set clear expectations about how you handle money and how you allow money to affect your relationships.
Some examples of financial limits might include:
Create and Stick to the budget.
Determine how much you spend on wants versus needs.
Say no to frequent borrowers.
Offer to cover certain expenses for someone instead of handing over cash.
Why are financial boundaries important?
Setting boundaries is an empowering skill. Standing firmly on healthy financial boundaries can sometimes be uncomfortable, but doing so can help you achieve it financial goals.
says Michael J. Certified financial advisor.
You can easily say “yes” to things like Savings for a homeOr take a vacation or pay off debt by learning to set boundaries with yourself — or with someone who constantly drains you of your money.
Financial boundaries can also help change your feelings about money in a positive way.
“It’s important to know how you feel when you cross the line, and having financial boundaries can help prevent you from feeling bad later,” says Evans. “For example, if you realize you have $400 in your budget to spend on eating out each month, that can be really good, but if you blow more than that, you’ll probably end up feeling worse.”
6 ways to set financial boundaries
Here are some strategies to help you get started.
1. Find out what is outside your financial comfort zone
Before you can set any kind of guardrail, you need to be clear about the boundaries you need.
“Check in with yourself and know when you feel bad about spending money,” says Evans. “Let’s say you go out to dinner with friends and agree to split the bill but end up paying more than you actually ate, and then feel uncomfortable about what you spent. This might be a good place for a financial boundary.”
Keep track of the times when financial situations with others take you outside your comfort zone, which will allow you to set the boundaries you need. And if you’re setting limits with yourself, leave some wiggle room for indulgence. As with diet, being too restrictive can make it difficult to stick to your plan.
2. Be clear about what you want
Clarifying your specific aspirations or goals can motivate you even more.
“Create a list of things you want to accomplish over the course of the year, whether that’s more self-care or more travel,” says Thomas.
Once you know what you’re trying to achieve with your money, he adds, you’ll have talking points that can help you communicate your boundaries.
3. Start early
It can be difficult to communicate in the midst of conflict.
“Start early and push the limits of money while things are going well,” says Thomas.
You may have a better chance of being heard and respected by others if you address them in times of peace (especially for the first time) rather than when you are in the middle of an argument.
4. Provide context
When you reach a limit, the response can be as if you are giving a hard “no” to something or someone.
But providing additional context for why you set financial limits may improve the odds of honoring them.
“Once you’ve listed all the things you want to do with your money this year, you can tell people what you’re passionate about and your hopes for,” says Thomas. “When you share that with people, people are less likely to upset you — you’re not just saying ‘no,’ you’re saying, ‘This is what I want to achieve,’ which means being more resourceful.” “
5. Rebrand yourself
People who used to be givers—or dependent on friends, family, or partners—may have a hard time putting themselves first when it comes to their financial needs.
If this sounds like you, Thomas suggests “rebranding” and changing the role you play in the relationship. You don’t have to lose the spirit of giving, but you do need to be firm about how much money you can give.
6. Be prepared for resistance
Your guardrails may cause tension with others, even if you provide context and communication in a compassionate way. This can be especially true in the face of cultural expectations.
“As a black woman, the expectations of my white counterparts tend to be very different,” says Evans. “My colleagues from communities of color are often expected to contribute to their families.”
It is important to expect that your boundaries will not always be respected and to have a plan for when they are not.
Try the following when you get opposition:
Offer non-monetary support. Think of ways you can help others without giving them money directly.
Stand firm on your limits and reiterate the reasons why you have them.
Determine the consequences of not respecting your boundaries, which could mean communicating less or even ending certain relationships.
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Tiffany Curtis writes for NerdWallet. Email: email@example.com.