National Foundation for Credit Counseling® (NFCC®) poll reveals that people facing financial trouble turn to their families for assistance before considering other options.
Washington, DC – The February poll hosted on the National Foundation for Credit Counseling® (NFCC®) website revealed that 44% percent of respondents are most likely to reach out to a parent or other family member first when experiencing financial distress. Other options like friends and financial professionals were less likely to be the first choice.
“Familiarity and trust play key roles in determining who we turn to in times of financial distress,” said Bruce McClary, spokesman for the NFCC. “Family can seem like a safe haven for those struggling with debt or other money problems, but relatives may not always be in a position to adequately offer the best solutions.”
Here are some common situations where family members may ask for financial help, and some tips to consider:
Delinquent Debt – There are serious consequences when credit cards, auto loans and mortgage payments are missed. The farther past-due an account becomes, the higher the level of urgency increases. Debt collectors can apply considerable pressure, leading people to seek quick solutions. Providing a fast bailout to a relative may get them out of a bind temporarily, but does not do much to prevent the situation from repeating. If offering a relative money to bring debt payments current, whether it is a gift or a loan, consider attaching some conditions like a visit with a nonprofit credit counselor or enrollment in a personal money management workshop.
Unexpected Expenses – If a family member asks for money to cover the cost of an emergency repair or a bill they had not expected, it is a clear sign that they don’t have adequate personal savings. There is plenty of evidence that Americans lack sufficient funds to handle these situations, which makes it important for everyone to make savings a top priority. Free resources like online budget calculators and financial education blogs are a good recommendation for relatives who need guidance.
More Month Than Money – Managing a household budget can be a challenge even under normal circumstances. Success often comes down to regularity, making sure that expenses are tracked consistently. When personal money management becomes a lower priority, the risk of overspending becomes greater. If a loved one reaches out for help after running short of money to cover necessary expenses, connect them with resources that can contribute to their long-term financial stability. Recent research shows that programs like Sharpen Your Financial Focus® lead to the improvement of financial health in a number of ways, including better money management.
A family handout or loan is not always the best way to resolve a personal financial crisis. Getting advice from a financial professional can make a big difference in finding the most sustainable solutions to budget and debt management challenges. When accompanied by the encouragement and support of loved ones, nonprofit credit counseling can make a lasting difference that boosts financial stability and helps put debt in its place.
The February poll question and responses are below:
Which of the following people are you most likely to reach out to when in financial distress?
- Friend 8%
- Parent/Family Member 44%
- Financial Planner 3%
- Nonprofit Credit Counselor 13%
- None of the Above 31%
Note: The NFCC’s February Financial Literacy Opinion Index was conducted via the homepage of the NFCC website from February 1–28, 2017, and was answered by 849 individuals.