There’s a reason airlines tell you to put on your emergency oxygen mask before helping others.
If you don’t prepare yourself, you might not be able to help others. It can lead to a worse outcome overall. And when it comes to helping someone financially, the same can be true.
Too often I see people chipping in at the detriment of both their financial future, and those whom they help. In the short-term it feels great and, in many cases, it is justified, especially after the recent economic shutdown. The unemployment situation is tough and it’s harder to find work.
But sometimes well-intentioned acts can have negative side effects. For example, if its recurring financial support, it can create an unhealthy dependency. And in a worst-case scenario, gratitude from the help can turn into expectations. Why get a job when you know others will keep supporting you instead?
Of course, many people receiving financial support don’t fit this mold. I know many people in these situations who keep putting in long hours to improve their job prospects and financial health. And I want to make this point very clear. Some providers need to – or are ok with and able to – indefinitely support other people financially. However, it’s still an important topic to consider for most Americans.
Why’s that? Almost half of Americans wouldn’t be able come up with $400 to cover an emergency expense. And that’s not a lot of money. One unexpected trip to the doctor can easily top that amount.
On top of that, from every tax bracket, workers in the U.S. live paycheck to paycheck. According to a Nielsen survey, close to 25% of families earning $150,000 a year or more are living paycheck-to-paycheck.
So, many people are not in a good position to support others financially. If an emergency strikes or work disappears – with the recent shutdown being a rude awakening – then it will likely be worse for both you and those who you’ve provided for.
That’s why I’m sharing some of my favorite research on financial support today. It’s a quick update but the ideas I’m about to cover can help you – and those around you – reach financial freedom faster. Then, once in that position, you can more sustainably provide for others.
Financial Freedom to Support Others
Warren Buffett recently said he doesn’t want to have to be dependent on the kindness of strangers or friends. This mindset has helped him become one of the world’s richest people. And now, he’s in much better position to help others.
Already, Buffett has given away more than $46 billion since 2000. And he’s also signed the Giving Pledge to give away 99% of his wealth, along with Bill Gates, Mark Zuckerberg and many other billionaires.
Side Note: Mark Zuckerberg’s charitable efforts and promises are great to see. But they’re not the reason I invested in Facebook stock. They don’t even come in the top 50 reasons why I invested. If you want, you can check out that link to see why I made the big investment.
Back to Warren Buffett’s wisdom… I never want to be in a position that puts my family and friends in a tough financial spot. That’s why I’m working hard now and also have a frugal mindset. I try to be thoughtful with how I spend and give both my money and time. I avoid instant gratification – in moderation of course – and try to look at the secondary impacts of my actions, both short- and long-term.
I hope this is one big takeaway from sharing this today. Putting just a little more thought into your financial moves can have a big impact down the road. And when it comes to supporting others financially, keep an eye out for negative side effects.
Once again, providing for others isn’t a bad thing. It’s necessary in many cases, but sometimes it will lead to a worse outcome overall. So, try not to overextend yourself or others financially when possible.
If you first protect yourself financially, you’ll be in a better position to provide for others.