5 Steps to establishing financial boundaries

Whatever your financial situation (good or bad), having boundaries when it comes to money is a must for everyone.

What are financial boundaries?

Financial boundaries are guidelines you set for yourself to help you manage your money more effectively. Having a clear idea of how and when you spend your money and sticking to it ensures you’re comfortable and that you don’t feel bad about your money habits.

This may include setting a budget, limiting credit card usage or creating an emergency fund, but it also includes saying no to people who want to borrow money from you and being honest with those requesting money.

Why are financial boundaries important?

Setting financial boundaries can help you achieve/maintain financial stability and reduce the financial stress and anxiety that come with overspending, accumulating debt, or not saving for emergencies or future expenses.

Financial boundaries help you to be confident with how you manage your money and avoid unnecessary conflicts with family and friends over money matters. Setting clear expectations and communicating openly about financial goals and limitations makes it easier to maintain healthy relationships while also achieving your financial objectives.

How to set financial boundaries

1. Figure out where your money comfort zone is

Before you set clear boundaries, it’s important to understand what you need. Keep track of your money and the situations that make you uncomfortable and be honest with yourself about what your budget allows.

For example, if you go out for dinner with friends and agree to split the bill but you end up paying for more than what you ordered, it might make you feel uncomfortable and hesitant, and that would be a good place to put a money boundary.

2. Be specific about what you want

Identify your financial priorities and focus on achieving them. Having clear and specific wants for your finances helps you to be intentional about your money. Whether you want to pay off debt, add to your savings or build an emergency fund, when you know what you’re trying to achieve, it helps you be steadfast in what you do and don’t do/allow with your money.

3. Set ground rules

Knowing your limits will help you establish clear boundaries around spending, borrowing and lending money: what you’re willing to do or not, for example, deciding on how much you’re willing to spend on certain items, the maximum amount you’re willing to lend to family or friends or how much you’re comfortable gifting.

4. Be consistent

Once you’ve established financial boundaries, ensure you’re enforcing them and sticking to your limits. Being disciplined is necessary for achieving your financial ambitions and living the life you want.

5. Have the tough conversations

Setting and enforcing your financial boundaries with family and friends can be challenging, but they’re important to protect your own financial health and well-being, as well as prevent misunderstandings or conflicts.

Communicate clearly and be open and honest with your family and friends about what you’re comfortable with and what your financial boundaries are. Remember that it’s your money and it’s important that they respect your wishes.

_{Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).}

_{Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.}