Helping Relatives in Financial Trouble

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Helping with the Parents

Dear Dave,

A couple of years ago my parents got into a big financial mess. They filed bankruptcy, and had to give up their house. Now, they lived on a fixed income of $2,220 a month, and my dad is not in good health. My wife and I help them out with a little money each month, but my sister and her husband don’t do much for them. Do you think I should lean on her a little bit in an effort to make her pitch in and help?

– Evan

Dear Randy,

If there’s one thing I’ve learned over the years, it’s that you can’t make another adult behave. The only person you can control is the one you look at in mirror every morning. Now, should a son or daughter want to help their parents, especially if one is in poor health, and the money’s tight? Absolutely! But family relationships are strange animals. Your sister and her husband may have some bruised feelings from something that happened years ago, or they may be having money problems of their own. At this point, all you can do is try to gauge their interest in this idea.

For starters, I’d suggest working up a monthly budget on your parents. I’m talking about a simple, one-page document, and show it to your sister and her husband. Let them know that mom and dad need a little help, and ask if they’d be willing to join you guys by chipping in a little money each month to help out your parents. Present the idea as you guys partnering with each other to help out, and be sure you don’t get into any finger-wagging, or lectures about responsibility. That kind of stuff is a real turn off, and it can get thrown back in your face in a hurry!

– Dave

Setting Aside Enough Money

Dear Dave,

How much money should I have in my business emergency fund? My annual sales are about $100,000, and I currently have a couple of months of general and administrative expenses set aside.

– Anonymous

Dear Anonymous,

You’re getting there! I like the idea of a small business having about six months of expenses set aside. Having that kind of cushion provides a ton of options, and lots of peace. It also eliminates the need for borrowing money, because with that kind of cash sitting around, you basically become your own line of credit! Having a personal emergency fund set aside is a little different than having one in place for your business. When it comes to personal finance, I usually recommend setting aside three to six months of expenses. But the basic idea is the same, regardless of whether you’re talking about personal finance or the financial health of your small business. A fully-funded emergency fund can turn a disaster into nothing more than a minor inconvenience!

– Dave

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Dave Ramsey is a nationally-syndicated radio talk show host and author of the New York Times bestselling books, Financial Peace Revisited and The Total Money Makeover. His life-changing advice in the area of personal finance helps people get out of debt, stay out of debt and build wealth that will last a lifetime and beyond.