Tips For Setting Financial Boundaries With Those Around You

Whether you're flying solo, you live with a partner, or you have a family to support, your finances likely play a large role in your daily life. Everything from stocking your refrigerator to keeping the lights on requires money — and how you manage your finances may either help you sleep soundly at night or contribute to your stress in a big way.

According to a 2022 survey conducted by the American Psychological Association and The Harris Poll, the majority of Americans (87%) are primarily stressed over the rise in prices of necessities as a result of inflation, such as gas and groceries. Generally speaking, about 65% of Americans admitted that they were stressed about money, which was the highest percentage recorded since 2015.

There's no question that finances can contribute to stress, but many people underestimate the physical, emotional, and mental impact of it, especially in the long term. Chronic stress can lead to issues including fatigue, depression, and immune disorders. That being said, there are ways you can reduce the stress you feel that is related to money. Financial boundaries, for example, can be extremely helpful when it comes to managing any anxiety linked to money matters — but how do you tell a loved one that your wallet is off-limits? Is it possible to politely set financial boundaries with your closest friends and family members? Here are some tips for creating boundaries that work for you.

Reexamine recurring small expenses

If you live in constant stress because you aren't sure if you have enough money for your daily necessities, it can help to take a closer look at your spending habits. Small purchases, such as your weekday morning coffee, can quickly add up and pull funds away from other financial obligations, like bills. When you add up the total of these small purchases over time, you may find that your stress is coming from having too many of them, rather than your actual bills. "We all throw away too much of our hard-earned money on unnecessary 'little' expenditures without realizing how much they can add up to," author David Bach, who has written on money matters, told CNBC.

However, this doesn't necessarily mean you need to ditch your morning coffee — especially if it's something you look forward to daily. Consider tweaking your habit by ordering a smaller size, or going to a café that charges lower prices.

Whether you prefer coffee dates or you're responsible for your office's coffee run, others in your life may notice your changes. For this reason, providing context can help. By making your boundary known and giving insight into why it exists, people are more likely to be understanding. "When you share that with people, people are less likely to bother you — you're not just saying 'no,' you're saying, 'Here's what I want to accomplish, which means being more resourceful,'" financial counselor Michael G. Thomas Jr. told NerdWallet.

Define your spending comfort zone

With everything from loans to credit cards at our disposal, many of us get into the unfortunate habit of overspending. By the time we've reached the end of our last check, it might seem like any sort of financial comfort has gone out the window. Reexamining your comfort zone in terms of spending can help you avoid running into this stress while you're waiting for your next paycheck. "Check in with yourself and recognize when you feel bad about spending money," financial therapist Aja Evans recommended to NerdWallet. "Say you go out to dinner with friends and agree to split the bill but end up paying for more than what you actually ate, and then you feel uncomfortable about what you spent. That could be a good place for a money boundary."

As you assess your comfort zone, you might find that seeing a certain number in your bank account is all you need to rest assured that you aren't overspending. On the flip side, knowing that you owe a specific dollar amount on your credit card each month may give you a better idea of your comfort zone. Once you define your limits, you can set these boundaries in place and uphold them whenever you're handling financial matters with other people. Again, just remember to communicate these boundaries effectively to the people in your life.

Inform others of your financial boundaries early

If you've been living beyond your means or stressed about money for a while, making changes to how you manage your finances can be life-altering. That being said, it can also have a significant impact on those who are affected by how you spend and invest your money. For this reason, it's always a good idea to let others know early once you've established any financial boundaries.

At first, you might find it uncomfortable to broach the topic with your friends and family. However, try to keep in mind that by telling them about your boundaries earlier rather than later, you'll be able to avoid some awkward situations. For instance, a friend might be less inclined to ask you for cash in a jam if they know that you already have a financial boundary in place. This can reduce the potential for any hard feelings in the future.

If you think it could be beneficial, consider providing details on your financial boundaries. For example, letting your significant other know that you have a monthly spending limit for dates can give them a better idea of what to expect. Together, you may even be able to develop alternative ideas for date nights that won't break the bank.

Learn how to politely say no when asked for financial help

Perhaps the most important part of establishing financial boundaries is sticking to them, even when times are tough for those around you. If you have a loved one with money woes who occasionally asks for financial help, you might need to start saying no to keep your boundaries intact. However, this shouldn't mean burning any bridges, nor should it come with any guilt on your end. "You don't need to explain or feel guilty, which is the motivation for long explanations that lead to engagement, and the unintended message that your arm can be twisted into making that gift or donation or loan," online advice columnist April Masini told U.S. News & World Report. "Terse is clear. Rambling, circular responses are not."

One way you can rest assured that you're doing your best to keep the peace is to approach these situations politely. Try to remember that the person requesting your help might already feel vulnerable, ashamed, or embarrassed. By declining the request politely — rather than expressing any offense or anger you might have felt from it, for example — you can keep your relationship intact and move forward.

How to provide support with resources other than money

While it's hard to deny that money makes the world go 'round, it's also true that there are other ways to support people in need. If you have a friend who is struggling financially, it might feel good to be able to help them with their expenses. However, your boundaries shouldn't have to be tested just because you know someone could benefit from money. Instead of immediately thinking of how you can pull together cash for a loved one, consider alternative ways you can provide support.

For starters, don't underestimate the value of emotional support during this time. Your friend or family member might be feeling stressed, for example, and a few kind words can go a long way. You can also help your loved one brainstorm ways to raise the money they need, depending on how comfortable they are with sharing details on financial matters with you.

If the person in need is willing to be open about their money struggles, you might also be able to help by providing them with financial guidance. Point them in the right direction — toward debt counselors or financial service providers, for instance — who can address their specific money problems. Remember, there is also assistance available for those who are feeling the emotional or mental stress of financial difficulties as well. Gently reminding your loved one of these options might be all the support they need.