Financial priorities: You or your family first? (Answer: You)

“Oh no, not another one,” I caught myself thinking as I listened to yet another female prospect recounts her money story wherein she took a few years off during peak earning years to care for an ailing parent.  As a result, her weakened finances couldn’t weather through an ensuing job loss, which further set her back financially.  Now, in her early 60s, she’s faced with crushing debt, no retirement savings and increasingly few good options.  (NOTE:  For the sake of anonymity, some of the prospect’s information have been changed.)  Think this can’t happen to you?  Think again.  Based on my experience, this can happen to anyone of us anytime. 

Here are additional money stories I’ve heard from professional women who prioritize their families’ needs before their own:

·      It’s my responsibility/duty to help out my parents financially, because they have little or no retirement savings.  

·      I need to send my kids to private school even if costs 5-figures (annually).  They have to stay academically competitive in order to professionally succeed.   

·      I want to give my sibling a place to land and a loan until (s)he can get back on her/his feet again.

·      I’d like to help my adult kids buy their first home so they can start building equity versus throwing money away on rent.         

While the details may differ from woman to woman, the overarching theme is the same: I need to put my family’s needs before my own. 

Key drivers (and costs) of prioritizing family first 

Based on my observation, the key drivers behind many professional women’s generosity is a potent cocktail of love, duty, responsibility, obligation and/or guilt for having “made it.” Oftentimes, making their gifting possible, if not expected, is a 6-figure income and/or a 7-figure net worth.  Outwardly, these women’s gestures seem generous and admirable.  Inwardly, it often comes at a high personal, emotional and financial price, which are less obvious, but very corrosive. 

For example, behind their high-powered 6-figure salary is likely a demanding, stressful job, which oftentimes require long hours.  Moreover, aside from their family, competing for these women’s hard-earned money are their own needs, hopes and dreams: student loan repayment; desire to start own family; home purchase; financial independence/flexibility; more fulfilling work; retirement; etc.  Dueling priorities between self and others often leave many of these women feeling exhausted, conflicted, resentful and financially worse off.  The financial tolls add up quietly, but quickly: having little or less retirement savings for age group; shouldering heavier debt loads for longer; forced to work longer and/or harder to meet personal and familial obligations. 

Ways to prioritize yourself (financially) first

To mitigate the personal, emotional and financial tolls of putting family first, make yourself the financial priority: 

·      Get clear about your BIG dreams.  What kind of Life do you want to live, if money was no object?  Don’t know yet?  Then, consider getting more clarity:  Be still.  Write in a daily journal.  Talk it out with your therapist.  Take long walks.  Do yoga.  Meditate.  But, don’t force it.  If your search is earnest, your goals will reveal themselves in time.     

·      Set aside an emergency fund (10-12 months’ worth of living expenses).  Make sure you can pay for life’s emergencies: car repair; new water heater; high-ish healthcare copay; etc.   

·      Pay off debts quickly and aggressively.  Ideally, you’d pay off the highest interest loan(s) first.  If the highest interest loan(s) are large and daunting, then consider tackling lower interest, but smaller, loan(s) first to build up confidence and momentum.  

·       Max out your traditional 401k (not Roth 401k!) every year.  For each dollar you contribute to your employer retirement plan, the guaranteed return is approximately 30%+, once you factor in Federal income tax savings and employer match (4% annual average).  For perspective, the historical average annualized return on a moderately aggressive portfolio (75% stocks / 25% bonds and cash) is around 7%.  

·      Negotiate for your real professional worth.  Find out the typical salary (and benefits) range for someone with your education, skillsets and experience both within your company and outside in the market place.  Couple your online research (e.g., Glassdoor, PayScale) with in-person discussions with colleagues and potential hiring managers in and outside of your company.  Your income and, thus, savings are critical in powering you to your goals!     

Initially, putting yourself financially first may feel counter-intuitive, selfish, bad, wrong.  (Expect a good dose of self-judgement.)  Short-circuit your emotions and sense of obligations by automating your savings and investing into your 401k, Roth IRA, HSA, FSA, savings account, etc.  The more you get into the habit of putting yourself financially first, the easier and more reflexive it becomes.  Moreover, when you take care of yourself financially, it becomes more natural to take care of yourself physically, emotionally, professionally, etc.    

Ways to navigate family and finance  

By getting clear about the Life you want to lead and taking financial steps to make it reality, you automatically set boundaries for the level of financial support you can provide to your family members.  Unfortunately, for many women, this may not be enough as the pull to help out family is so biologically and emotionally ingrained.  As is, before doing so, consider asking yourself these questions to help distinguish between reality from emotions:  Does my family really need my help?  How can I help them help themselves?  Are there other options besides (or in addition to) me?  What is my intention(s) for helping my family?  How much can I help my family financially without jeopardizing my own well-being?  What are the “terms” by which I will help my family members?  (In other words, how much and for how long?)  What result(s) do I expect from my “investment” in my family?  Will I be okay with getting nothing (or just grief) back in return?  

Additionally, should you decide to financially help out your family with a (sizeable) loan, consider putting it in writing.  (Make it professional, rather than just personal.)  This provides critical documentation and clarity for both parties.  Should either party fail to meet their responsibilities as spelled out in the terms, then the (counter) party has recourse or a way out.  

Final thoughts…

I understand the strong emotional pull in wanting to help out one’s family financially, especially when you’re making 6-figures.  Unfortunately, mixing family and finance is a slippery slope.  Based on my experience (granted I work with just women), it’s usually the daughter, mother and/or partner who gets short-changed, if not worse.  When I call out the adverse impact that helping family would have on their finances, I get the sense that my prospects and clients think I don’t understand or, worse, am cold and uncaring.  Afterall, as natural caretakers, don’t we women have a responsibility, duty, calling to nurture and support our family?  To an extent, yes.  But, it can’t come at the expense of harming ourselves.  If so, then our generosity will be short-lived; comes with a large dose of resentment, anger and bitterness; and/or potentially leave us in the poor house.  

When it comes to financially supporting family members, the goal is not to just be generous, but also judicious.  You can only do the former well when you take time to do the latter well – first!  Moreover, at the end of the day, perhaps one of the best things you can give a family member who’s struggling financially is an example of how to be financially independent and successful!