10 Practical Steps to Creating, Establishing, and Maintaining Financial Boundaries

Importance of Financial Boundary Setting

Oftentimes, we think about setting boundaries as selfish or rude. Rather, boundaries (financial or otherwise) are ultimately a form of self-love as well as an act of love for others. Boundaries allow us to feel safe, comfortable, and empowered. Setting boundaries for ourselves also gives others permission to set boundaries for themselves. Healthy boundaries help to build respect and trust. Financial boundaries are important, because finances are intimate, personal, and vulnerable - how we choose to spend our money indicates our values and beliefs.

Before learning about steps to creating, establishing and maintaining financial boundaries, let’s explore some common relations that require financial boundary setting. This is not an exhaustive list - perhaps a future blog post can address financial boundary setting with employers, employees, coworkers, roommates, chosen family, friends, and parents!

Financial Boundary Setting for Parents with Children

• Adult Children

  Financial enabling is particularly common when grandchildren are involved, oftentimes at the expense of you, the parent. If financially supporting your adult child is putting your financial safety and stability in jeopardy, it is time to set some more firm financial boundaries. Until and unless your adult child knows that they need to support themselves, they will continue asking you for financial support. Remember…

  • You have worked hard for your money and you deserve financial safety and stability as you approach and enter your retirement.

• Young Children

  Setting boundaries with young children can be challenging - especially when you are feeling physically, emotionally, and mentally exhausted. Wanting to avoid tantrums is real! However, giving children everything they ask for is usually not a long term solution. In fact, giving children everything they ask for is more likely to have the reverse outcome - making it increasingly difficult to say no in the future.

Financial Boundary Setting Tips for Parents

• Ask yourself…

  • Why do I struggle to say no? 

    • What money messages am I sending my children by always saying yes? 

    • Read Why Parents Should Feel Good About Saying “No” To Their Children

  • What money messages am I sending my children by always saying no? 

  • What money beliefs would I like my child to hold in the future?

    • What behaviors do I need to have in order to help them develop these money beliefs?

• If your child is an addict or in recovery, you may have difficulty trusting them with money. Once you have given someone money, you cannot control how they spend the money - however much you may want to.

  • Consider joining a support group for parents of addicts.

• If your adult child threatens to harm or kill themselves if you do not provide them financial assistance, the threat must be taken seriously.

• Call the Suicide and Crisis Hotline or 911.

• Read Held Hostage By Our Son’s Suicide Threats by Neil D. Brown of Healthy Family Connections.

Financial Boundary Setting for Dating and Relationships

• Short-Term Partner or Dating

  As you are dating and entering a new relationship, you are establishing financial expectations, patterns and rhythms in your relationship. If you pay for every meal now, your partner will likely expect you to continue paying for every meal. The start of a new relationship is a great opportunity…

  • Start talking about money from the first date!

• Long-Term Partner or Spouse

  If you are in a long term relationship and hoping to set financial boundaries for the first time, your partner may initially feel confused, offended, shocked, annoyed, or hurt. This does not mean that what you are doing is wrong! Change can be difficult, especially when your partner, who you expect consistency from, is setting financial boundaries with you for the first time. This likely will not be a one time conversation, as change takes time.

Financial Boundary Setting Tips for Dating and Relationships

Ask yourself…

• Is a pre-nup or post-nup important to me?

  • “I would like a pre-nup or post-nup to keep both of us safe, as we do not know what the future holds.”

• How much financial transparency do I need to feel safe and secure?

  • “Financial transparency is important to me. I would like to know when you plan to open a new credit card or take out a loan as this impacts both of us.”

• How would I like to merge finances?

  • “When we move in together, I would like to split rent equitably not equally. I am happy to split all other expenses equally. How does that feel to you?”

• Do I feel any sort of obligation or owing when someone pays for the first date?

  • “I would like to pay for my own drinks tonight.”

10 Practical Steps to Creating, Establishing, and Maintaining Financial Boundaries

1. Reflect on Current Financial Boundaries

In order to decide where you are headed, you need to know where you currently stand. You may, perhaps even unknowingly, have already set some financial boundaries. You may have very strict boundaries that you are hoping to ease up on. Ask yourself…

• How have I already set financial boundaries with people in my life?

  • How have these financial boundaries served me?

  • How have these financial boundaries been problematic for me?

• Are there financial boundaries that I have not yet set but would like to?

  • Why have I not set these financial boundaries?

  • What do I need in order to set these financial boundaries?

• How have my strict financial boundaries protected me or been in response to past experiences, relationships, etc.?

  • How could less strict financial boundaries be beneficial at times?

2. Explore Your Limitations

Everyone has different levels of comfortability with different situations. Consider the following common situations that may call for financial boundary setting…

• Eating dinner at a restaurant

  • How often am I financially able to eat at a restaurant?

  • How do I feel about splitting the bill evenly versus on an individual basis?

• Gift giving for birthdays, holidays and anniversaries

  • How do I feel about gift giving and gift receiving?

  • When is it important for me to give a financial gift?

    • What exact dollar amount do I feel comfortable gifting? - this amount may vary depending on the person.

• A friend, family, or partner asking for money

  • Am I okay giving this person money knowing that I will have no say in how it is spent or used?

  • Am I okay giving this person money knowing that they may never pay me back?

  • In what non-financial ways am I able to help?

3. Effective Communication

All the reflection on your financial boundaries and exploration of your limitations is for nothing if you cannot effectively communicate your boundaries. Effective communication requires a degree of directness. Oftentimes, people try to soften the blow when enforcing boundaries. However, this typically results in unclear, confusing boundaries, creating further problems. Being direct does not mean that you are harsh or rude. Rather, being direct means being clear and firm.

• Write down your boundaries in simple, concise sentences using ‘I’ statements and specificity.

  • Complete this template on communicating boundaries.

  • Avoid statements such as “I don’t think I can” or “I’m not sure this works for me”, as they are vague and unclear. They also leave space for pushback.

• Ask for the other person’s understanding of your boundaries to ensure that you communicated clearly.

  • “What is your understanding of what financial transparency means to me?”

  • “Did I explain that well?”

  • “Does that make sense?”

  • “Was I clear?”

4. Practice Communicating Financial Boundaries

If you are anticipating a specific conversation or situation in which you will have to set financial boundaries, practice! Practice with a friend, family member, your financial therapist, anyone. Practice in front of a mirror. Sure, it will probably feel a little strange or awkward, but practicing will give you the opportunity to find the correct wording. You will also get feedback that will help you to better navigate the conversation when it arises.

5. Give Yourself Time

We cannot possibly anticipate every financial boundary setting situation that will arise. Unique situations always present themselves. In some situations, you will have to make a decision in the moment. In other situations however, you may feel like you need to make a decision in the moment, when in fact, you have some time. If possible, learn how to give yourself time to reflect before making a quick decision. Practice saying…

• “I can let you know by this Saturday.”

• “I need to talk with your mom before making a decision. We make these decisions together.”

• “I am considering the opportunity, and I want to take a couple days to think it through further. I will follow up with you.”

6. Positive Framing

We often think of boundaries in the negative - what we cannot or will not do. Instead of focusing on what you cannot or will not do, share what you are willing to do. When we start a conversation with “No, I’m not going to” or “You can’t keep”, the other person quickly becomes defensive, hurt, frustrated, etc. Consider the following clear, concise, direct, and positive approaches…

• “I am willing to pay your landlord directly for your rent” or “I will pay a certified financial therapist on your behalf.” 

• “Giving you cash is not a long term solution. Instead, I can help you with your resume and help you look for a job. I can also drop the grandchildren off at daycare, so you can interview for jobs. ”

• “I would like to open a joint bank account that we only use for groceries. I do not feel comfortable merging 100% of our finances. A joint bank account is a small step I would like to take though.”

• “Cosigning a loan is not an option, but I can help you to find a loan that you do qualify for. I can also help you to create a savings plan, so you do not need a loan for this purchase.” 

7. Manage Expectations

Managing expectations requires anticipatory communication. For example…

• “Today, we are going to the store. We can look at toys, but we cannot buy any.”

• Determining how you are going to split expenses, such as rent, groceries, etc., before moving in together - not after.

Managing expectations is helpful for all parties to make informed decisions and plan accordingly. Managing expectations also makes setting financial boundaries easier, as you can refer back. For example…

• “Remember what we talked about in the car? We are looking at toys today, but we cannot buy any.”

• "We agreed to split expenses 50/50 before moving in together. I have made other decisions based off this decision. If you would like to reevaluate how we split expenses, we can do so thoughtfully and with further discussion.”

8. Follow Through

Stating your boundaries is one thing, but following through with them - this can be the hardest part! After setting financial boundaries, you may feel guilty that your partner feels hurt or that your child feels sad. This may cause you to reconsider your boundaries, questioning and doubting yourself. Receiving pushback does not mean that your boundaries are unreasonable, unfair, or problematic. You have done the work (reflecting on current financial boundaries, exploring your limitations, managing expectations, etc.) to set these boundaries. Trust yourself and trust the process - not all boundaries will be well received.

9. Consistency

If you are effectively communicating your financial boundaries and following through with these boundaries, you are being consistent! Inconsistency with financial boundaries means that what you say and what you do are not aligned. Inconsistency can (and does) lead to confusion and boundary violations (either intentionally or unintentionally).

10. Financial Boundary Setting Support System

Surround yourself with people who support you and your financial goals and decisions. Just as setting financial boundaries is an act of love, respecting the financial boundaries of others is also an act of love. If someone is not respecting your financial boundaries, consider discussing that with them. Ask yourself…

• Who has crossed my financial boundaries? 

  • How did I respond when my financial boundaries were crossed?

  • How would I like to respond in the future when my financial boundaries are crossed?

• What financial boundaries have others set with me?

  • How do I respond to the financial boundaries others have set with me?