6 Ways to Set Financial Boundaries

While setting boundaries around money can sometimes be a daunting task, doing so can help put you on the path to financial wellness.

If you struggle with setting (and sticking to) financial boundaries, there’s no better time than the start of a new year to get into the habit.

“Money boundaries are limits that you put in place to protect how you feel and to protect your finances,” says Aja Evans, a licensed mental health counselor and financial therapist in New York City.

Financial boundaries let you set clear expectations around how you engage with money and how you allow money to affect your relationships. 

Some examples of financial boundaries might include:

• Limiting how much you spend on wants versus needs.

• Saying no to someone who frequently borrows money.

• Offering to cover a specific expense for someone, instead of handing over cash.

Boundary setting is an empowering skill. Standing firm on healthy financial limits can sometimes be uncomfortable, but doing so can help you achieve financial goals. 

“From a positive psychology standpoint, we should look at setting financial boundaries as a way to cultivate our capacity to say ‘yes,’” says Michael G. Thomas Jr., a lecturer with a doctorate in financial planning at the University of Georgia and accredited financial counselor.

You can more easily say “yes” to things like saving for a house, taking a vacation or paying down debt by learning to set boundaries with yourself — or with someone who constantly drains your funds.

“It’s important to know how you feel when you cross a boundary, and having money boundaries can help to prevent you from feeling bad later on,” Evans says. “For example, if you realize that you have $400 in your budget to spend on eating out every month, that can feel really good, but if you blow more than that, you’ll probably end up feeling pretty bad.”

Here are some strategies to help you begin.

Before you can set any sort of guardrails, you have to get clear on what boundaries you need. 

“Check in with yourself and recognize when you feel bad about spending money,” Evans says. “Say you go out to dinner with friends and agree to split the bill but end up paying for more than what you actually ate, and then you feel uncomfortable about what you spent. That could be a good place for a money boundary.”

Keep track of when money situations with others take you outside of your comfort zone, which will allow you to identify the boundaries you need. And if you’re setting a boundary with yourself, leave some wiggle room for indulgence. As with dieting, being too restrictive can make it harder to stick to your plan.

Getting clear on the specific aspirations or goals you have can further motivate you.

“Create a list of things that you want to achieve over the course of the year, be it more self-care or more travel,” Thomas says.

He adds that once you know what you’re trying to achieve with your money, you’ll have talking points that can help you communicate your boundaries.

It can be hard to communicate in the heat of conflict.

“Start early and communicate money boundaries while things are going well,” Thomas says.

You may have a better chance at being heard and having your boundaries honored by others if you address them during times of peace (especially for the first time) rather than when you’re in the middle of a disagreement.

When you communicate a boundary, the response can be almost as if you’re just delivering a hard “no” to something or someone.

But providing additional context for why you are setting a financial boundary may improve the odds of it being respected.

“Once you’ve listed all the things you want to do with your money this year, you can tell people what you’re excited about and your hopes,” Thomas says. “When you share that with people, people are less likely to bother you — you’re not just saying ‘no,’ you’re saying, ‘Here’s what I want to accomplish, which means being more resourceful.’”

People who are used to being givers — or depended on by friends, family or partners — may struggle with putting themselves first when it comes to their financial needs.

If this sounds like you, Thomas suggests “rebranding” and changing the role that you play within a relationship. You don’t have to snuff out your giving spirit, but you do have to be firm about how much money you can give.

Your guardrails may cause tension with others, even when you’ve provided context and communicated in a compassionate way. This can be especially true in the face of cultural expectations.

“As a Black woman, expectations of my white counterparts tend to be very different,” Evans says. “My peers from communities of color are often expected to contribute to their families.” 

It’s important to expect that your boundaries won’t always be honored and have a plan for when they aren’t.

Try the following when you receive pushback: