4 ways to set healthy financial boundaries in 2024

Setting boundaries, let alone setting financial boundaries, can be difficult. A January 2024 study conducted by Wells Fargo and The Female Quotient found that one of the only topic that is deemed more socially taboo to discuss than money is one's number of past romantic partners.

Financial boundaries should viewed as a positive step towards protecting your financial and mental health, as well as your relationships with those closest to you. Without implementing financial boundaries, and learning to say no gracefully, you might find yourself being stretched too thin both emotionally and financially.

CNBC Select shares tips for setting and keeping financial boundaries to maintain healthy and happy relationships with friends, family and partners.

Before setting financial boundaries, it's important to first define your financial goals.

It might help to break your objectives into short-term and long-term goals. Then, prioritize them in order of importance so that you have more actionable steps. High-priority items such as paying off credit card debt or creating an emergency fund are good places to start. Longer-term goals like saving for future children's education can still be taken into account but may not always take precedence.

Having these goals will motivate you to stick to your financial boundaries and make it easier to communicate them with others.

Budgeting apps are a great way to track your spending and ensure you're adhering to your goals. For example, Honeydue allows couples to link their bank accounts and credit cards to the app to help manage their money more transparently and better plan for the future. The app is free to use and offers perks such as bill payment reminders as well as alerts for monthly spending limits by category.

A May 2023 Federal Reserve report shows that one-third of people between the ages of 22 and 24 who are living with their parents are doing so to support them financially, and this percentage only increases with age. Being able to financially support your friends and family is a great goal to have, but you also need to be realistic about your own financial needs.

Nearly 40% of adults who responded to the survey said that they wouldn't be able to cover an emergency expense of $400 with cash savings. By subjecting yourself to increased financial pressure, you're not only harming your current self, but you may be preventing your future self from helping others once you've become more financially stable.

It's important to ensure you are financially sound before you consider gifting money. If you're looking for a nearly risk-free way to grow your savings, consider putting your funds into a high-yield savings account or certificate of deposit (CD). Many of CNBC Select's top-rated high-yield savings accounts, such as Lending Club High-Yield Savings, offer APYs of 5% or more, well above the national average savings rate of 0.47%.

Strengthening your financial position will put you in a better position to help others down the line. There are also many alternative ways you can support others without directly giving them money.

As with gifting money to support loved ones, think carefully before lending money to others, especially if it is out of guilt or pressure.

Lending money to friends and family is risky as it can lead to negative outcomes in your relationships. There can be conflicts over the amount of money loaned, repayment terms, lack of payments and more.

Should you choose to lend money, make sure you set ground rules that each party acknowledges and agrees to, such as the amount of money as well as a repayment schedule.

One guideline when it comes to lending money is to only lend what you can afford to lose. You don't want to be in a situation where you are dependent on the money being paid back to you to cover your own expenses.

Communication is key when setting boundaries with friends, family and significant others.

58% of Millenials and 57% of Gen Z'ers argue with their partners about finances, according to a February 2023 study by Bread Financial. This isn't inherently a bad thing as having difficult financial conversations is essential to a healthy long-term relationship.

Wendy Wright, a finance and marriage therapist previously told CNBC Select to keep an open mind when discussing your financial goals with a partner. "Without judging them and without doing the math, just put them on there so that each person is allowed to dream."

Your level of comfort and transparency around your finances may vary depending on who you are discussing them with. Be honest and forthcoming in your talks about money with your loved ones.

Try and work on being more comfortable with saying no. This can be something as small as turning down going out to dinner or a larger expense such as a vacation.

Providing context can help your loved ones better understand your perspective and be more receptive to your boundaries.

Creating healthy boundaries when it comes to your finances is key for both your mental and financial health long term. Open communication and setting clear and obtainable goals can help you become more comfortable creating and maintaining financial boundaries.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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