As millions of Americans return home for the holidays, they'll share homemade meals and, in some cases, awkward conversations about money, especially with many people still unemployed or underemployed and strapped for cash. U.S. News asked several etiquette and personal finance experts for their tips on fielding uncomfortable questions from friends or family members.
1. Question: I'm having a tough time, so could I borrow some money?
Answer: Don't feel pressured to give an answer on the spot. An immediate no could embarrass the person, while an immediate yes doesn't give you time to think it through. Experts agree that you should never give money you can't afford to lose. But if you can afford to help a family member and want to do so, then Manisha Thakor, a personal finance expert and author of Get Financially Naked: How to Talk Money With Your Honey, says you should "understand fully what the request is for and why it is being made." As she puts it, "there's a big difference between a family member experiencing a true emergency situation and trying to stave off a liquidity crisis versus one wanting to get a cash advance for purely discretionary holiday spending."
If you decide to give a relative money, be clear about whether you consider it a gift with no strings attached or a loan with terms and a repayment schedule. Laura Adams, host of the "Money Girl" podcast and author of the book by the same name, suggests using resources like LoanBack.com, LoanDepot.com, and RocketLawyer.com to document your loan agreement and track payments. If you're helping out with someone's mortgage, she recommends using a site like NationalFamilyMortgage.com so borrowers can take advantage of tax benefits like the mortgage interest deduction.
2. Question: When are you going to pay back the money I loaned you?
Answer: On the flip side, if you received a loan from a family member and haven't paid the money back, seeing that relative could create tension. "Honesty is always the best policy," says Adams. "If you're having trouble repaying a loan, let them know. Don't string them along because that's really bad for the relationship."
Adams adds that you may want to ask if their circumstances have changed. "They may be having financial issues on their end and you could be holding them back from making good decisions," she says. "Engage them further by saying, 'Why are you asking about the repayment? Is there a specific amount that you need back now?'" Also discuss a timeline for repaying the loan in full and, if you can, pay back a portion of the loan now as a show of your good intentions.
3. Question: So, how much money did you make this year?
Answer: If you're uncomfortable answering questions about your salary or bonus, don't. As Ornella Grosz, speaker and author of Moneylicious, says, "you don't have to divulge your financial situation. Even though I may not be struggling, I'll just let them know that right now I don't feel comfortable discussing." Her recommendation is to politely change the subject.
However, Thakor says being more transparent about money can be healthy in some situations. "For instance," she explains, "many people are seeing bonuses and salaries decline. By putting the truth out there and saying, 'I got 60 percent of what I did two years ago' or 'We spend half as much this year as last because times are tough,' you can lay the groundwork with friends and family for other vital conversations." That could help pave the way for more realistic expectations when it comes to family gift-giving or travel.