Suze Orman's Toughest Family Money Rule Might Be Her Most Important One Yet
You’d do anything to help your loved ones. So when your sibling needs help paying rent this month, or a bestie who's like a sibling racks up credit card debt, you don’t hesitate: You reach into your wallet or go online to rearrange some accounts.
But are you really doing the right thing?
Famed financial expert Suze Orman doesn’t think so.
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Orman has some tough love for generous hearts: You may be enabling bad financial habits while quietly undermining your own financial future. Helping the wrong way, she says, can set your loved one up for continued struggle while draining your own resources. It’s a hard lesson, but one she believes people need to learn.
First, Can You Actually Afford To Help?
When it comes to bailing out your loved ones, your spirit may be willing, but your wallet may be weak. That’s why the first part of what Orman calls her “generosity test” — the assessment of whether you should help someone financially — involves looking at your own situation.
“If giving someone money will mean you can’t pay down credit card debt this month or add to your emergency savings, that doesn’t pass my generosity test,” she said. “When what you give reduces your own financial security or prevents you from building strong security, it is not generous.”
Remember that old saying about saving someone who is drowning? You can’t let them pull you under with them. The same rule applies to your personal finances — helping at the expense of your own stability benefits no one.
Giving People a Financial Band-Aid Doesn’t Stop the Bleeding
The next step in Orman’s generosity test is determining whether helping someone through a short-term cash crunch will actually solve a problem or just delay the next emergency.
When advising an Oprah.com reader who was debating loaning a dear friend money to get out of a financial tight spot, Orman asked them to consider the nature of their friend’s financial woes. She suggested asking questions like:
Is this a temporary state, or do they always seem to be struggling?
Do their problems seem to be deeper than a lack of funds?
Have you noticed broader issues with their spending and saving habits — or lack thereof?
Do they regularly run up debt by buying expensive things?
Are they aware of the problem? And are they actively trying to change?
Orman warned that people who aren’t aware that they’re behaving irresponsibly — let alone taking steps to change their behavior — often repeat the same mistakes. In those cases, helping once can turn into being asked again just months later.
“If your friend is always experiencing financial problems, any money you give her will just serve as a Band-Aid,” she said. “Sooner or later, she will find herself in dire straits again because that is where she feels comfortable. It’s the place that, for now, defines her.”
Sometimes, Forcing Structure Through a Loan Is Helpful
What should you do if you can afford to help without burdening yourself — and your loved one seems capable of climbing out of their financial rough spot? Orman encourages you to offer a loan instead of giving money outright.
Instead of being punitive or like you want to teach them a lesson, Orman explains that the structure and accountability of a loan can help your loved one regain their confidence.
“Hear me out: By making it a loan, you offer that person the structure to stand in their truth," she said. "They need help now, but when they are able, repaying the money will bring them a sense of responsibility. Maybe that time comes next month. Maybe it comes next decade. It doesn’t matter. It may seem counterintuitive to you, but asking them to repay the money when they are able will enable them to stand taller.”
In other words, tough love is still love — especially when it protects both of you.
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The Bottom Line
Your big heart may push you to help loved ones whenever they’re financially underwater. But Suze Orman’s toughest rule is also one of her most important: Never sacrifice your own financial security in the name of generosity.
Run every request through her generosity test first, and you’ll be in a far better position to help others without hurting yourself in the process.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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