Breaking Sibling Borrowing Cycles

Suzanna De Baca -- Expert Business Source, 9/18/2008 8:10:00 AM

What can you do when your adult sibling repeatedly asks you for money or financial assistance?  How can you say no and still preserve the relationship?  It is complicated, but it can be done.

In a recent article called “Financial Problems with Siblings,” I discussed how difficult it can be for many to change family financial patterns, especially when those patterns involve dependence.  I’ve witnessed this issue with clients and friends countless times over the years. Changing the cycle of being a financial caretaker to your sibling takes time, discipline and resolve. Interestingly, it also requires some tough self-examination and a clear perspective.

When you loan money repeatedly to your brother or sister, what are you really doing? Are you helping them or are you ultimately hurting them? What are you getting out of the situation? You may think you are getting only grief, but it may be more complex than that.

Are you playing out a parent/child relationship?

The financial relationship between adult siblings can take on a quality similar to a parent/child relationship. In many cases, parents unconsciously keep their children dependent on them financially by continuing to help them long after they are able to care for themselves. Of course, there are emergencies where any parent would help a child if possible, but in many cases the dependence on continuing loans or gifts becomes chronic. Similarly, if your sibling needs help once or twice, you are probably willing to help, but when it becomes a habit or when it threatens your own financial health, it is a real problem.

In real parent/child situations like this, parents often ask me, “Why can’t my adult child make it on his or her own? Why can’t they learn to grow up?” But why would the child break a cycle that is working so well? If you always give and there are no consequences, why would the child (even if they are an adult) change this situation? They like the gravy train, even if they experience some guilt, just as the parent must get some unconscious satisfaction in continuing to take care of their child. Whether they realize it or not, by helping an able adult child over and over, a parent is implicitly telling a child, “I see you as a child and I don’t believe you are capable of acting like a responsible adult.”

Letting your child or sibling grow up.

It is difficult for a parent to see his or her child suffer so many people give up and just hand over the money. Watching a child struggle is painful. Yet, it is necessary for any person to grow up and develop skills to function as a mature adult.  It may not be easy for some to learn these skills, but it will be even harder if you don’t let them develop. Most parents finally conclude that they cannot pick up their baby each time he or she stumbles and eventually the baby learns to walk independently. Letting go of the purse strings may be harder.

If you are repeatedly acting as a banker to your sibling, ask yourself if you are playing the role of parent in your relationship with your sibling. Are you continuing to care for them in a way that continues their dependence?  Are you caring for them at your own expense? If you are, know that you can break the cycle, but acknowledge your own role in the situation.

I realize that if a sibling is physically or mentally ill, the situation is different and more extreme. You may indeed be forced into a guardian-like role and in this case, you will have to decide if legal measures or trusts are required and make tough choices.  In a normal situation, however, it is up to you--- not your sibling, who has learned that he or she can take advantage of you – to address the situation.

While changing these patterns takes time and perseverance, here are a few suggestions on how to begin:

Have an honest conversation with your sibling. Tell your sibling that you will not continue to bail them out financially.  Many people have never even expressed this to their sibling. Sometimes simply stating the fact will correct, or begin to correct, the problem.

Explain why. There may be many reasons that you do not want to help your sibling, but one very good reason is that they are capable of taking financial responsibility for their life on their own. Let your sibling know that you see him or her as a competent adult and that caring for them is not your responsibility. It is their own. If your sibling has made a career choice or life choices that have made it difficult for them to live the lifestyle they want, that is not your responsibility. That was their choice, just as your choices were your own.  If they want a different life, they might have to make different choices.

Lay down the rules.  You can tell your sibling what you are willing to do in the future, if anything.  It is fair to require action, such as “I’ll give you this amount of money if you demonstrate x, y  or z,” but realize that this kind of behavior perpetuates a parent/child relationship where you have expectations.  You have every right to say that you will only lend them money one more time, on these terms, and if they fail to meet the terms you are done.  Similarly, you might tell your sibling that you will give them a certain amount each month or year but no more, end of story.  If they can’t accept that, they can chose nothing at all.

Create a time table.  If you are unwilling or unable emotionally to cut your sibling off cold turkey, create a schedule or time table. Tell them that you will continue to support them for a month or a quarter or a year, whatever you feel comfortable with, and let them know that after that time, the bank is closed.

Stick to your guns.  When you make rules and create time tables, you must adhere to them.  If you do not, you are sending a clear message that everything is negotiable and that you do not really mean what you’re saying. 

If readers have suggestions of actions that have worked in breaking family financial cycles having to do with siblings, please let me know.

Suzanna de Baca is president of Private Capital Solutions Group. Securities offered through Broker Dealer Financial Services Corp. Member FINRA & SIPC. Investment Advisor Representative of Investment Advisors Corp., A Registered Investment Advisor.  Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice.