6 Ways to Set Financial Boundaries | lifestyle

Setting boundaries around money can sometimes be a daunting task, but it can help you get on the road to financial wellness.

If you struggle with setting (and sticking to) financial boundaries, there’s no better time than the start of the new year to get used to it.

What are the financial limits?

“Money boundaries are limits you put in place to protect your feelings and your finances,” says Aja Evans, a licensed mental health counselor and financial therapist in New York City.

Financial boundaries allow you to set clear expectations about how you work with money and how you allow money to affect your relationships.

Some examples of financial boundaries may include:

  • Budget creation and compliance.
  • Limiting how much you spend on wants versus needs.
  • Say no to someone who borrows money frequently.
  • An offer to reimburse someone for a specific expense instead of handing over cash.

Why are financial boundaries important?

Setting boundaries is an empowering skill. Standing firm on healthy financial limits can be uncomfortable at times, but it can help you reach your financial goals.

“From a positive psychology perspective, we should look at setting financial boundaries as a way to cultivate our ability to say ‘yes,'” says Michael G. Thomas Jr., PhD lecturer in financial planning at the University of Georgia and a certified financial advisor.

You can more easily say yes to things like saving for a house, a vacation, or paying off debt by learning to set boundaries with yourself—or with someone who’s constantly draining your finances.

Financial boundaries can also help shift the way you think about money in a positive way.

“It’s important to know how you feel when you cross a line, and having a boundary with money can help prevent you from feeling bad later,” says Evans. “For example, realizing you have $400 in your budget to spend on food each month can feel really good, but if you blow more, you’ll probably end up feeling pretty bad.”

6 Ways to Set Financial Boundaries

Here are some strategies to get you started.

1. Find out what is outside of your money comfort zone

Before you can set up any barriers, you need to figure out what boundaries you need.

“Check in with yourself and realize when you feel bad about spending money,” says Evans. “Let’s say you go out to dinner with friends and you agree to split the bill, but you end up paying for more than you actually ate, and then you feel bad about what you spent. That might be a good place for a money line.’

Watch for when money situations with others push you outside of your comfort zone, allowing you to identify the boundaries you need. And if you’re setting a boundary with yourself, leave some room for leniency. As with dieting, too much restriction can make it difficult to stick to a plan.

2. Be clear about what you want

Getting clear on specific aspirations or goals you have can further motivate you.

“Make a list of things you want to accomplish throughout the year, whether it’s more self-care or more travel,” says Thomas.

She adds that once you know what you’re trying to achieve with your money, you’ll have things to help you communicate your boundaries.

3. Start early

In the heat of conflict, it can be difficult to communicate.

“Start early and communicate money boundaries while things are going well,” says Thomas.

You may be more likely to be heard and respected by others if you approach them in times of peace (especially for the first time) than if you are in the middle of a disagreement.

4. Provide context

When you communicate a boundary, the reaction can almost be like saying a hard “no” to something or someone.

But providing more context for why you’re setting a financial limit can make it more likely that it will be respected.

“Once you write down all the things you want to do with your money this year, you can tell people what you’re excited about and what you’re hoping for,” says Thomas. “When you share it with people, people are less likely to bother you – you’re not just saying ‘no’, you’re saying, ‘Here’s what I want to achieve, which is to be more inventive’.”

5. Change your name

People who are used to being givers—or friends, family, or partners who depend on them—may struggle to put 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 extinguish your spirit of giving, but you do have to be firm about how much money you can give.

6. Be prepared to be pushed

Your railing can cause tension with others, even if you’ve provided context and communicated 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 are very different,” says Evans. “My peers in communities of color are often expected to contribute to their families.

It’s important to expect that your boundaries won’t always be respected and to have a plan in case they aren’t.

When you receive a rejection, try the following:

  • Offer of non-monetary support. Think about how you can help others without directly giving them money.
  • Stand firm on your boundaries and reiterate your reasons for having them.
  • Describe the consequences of not respecting your boundaries, which may mean you reach out less or even end some relationships.

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