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A How-To Guide For Setting Clear & Firm Financial Boundaries

As the conversations around mental health become more mainstream, we’ve seen lots of folks come to realize that setting boundaries is a valuable part of their well-being journey. Boundaries can help us create healthier relationships, environments, and interpersonal dynamics.

And there are many kinds of boundaries that you can set–be it physical, intellectual, emotional, work, or even time and resources! Well one type of boundary that’s incredibly important to learn about and to establish are financial boundaries. Here, all you need to know.

Why financial boundaries are important.

First, let’s establish what boundaries are, as many people may have misconceptions about what they look like. As certified therapist Elizabeth Earnshaw, LMFT, writes about boundaries: “[They] are what happens when you can sense what you need and want–and can access your voice to speak to those things.” Essentially these are the lines we draw about the sort of behaviors we deem appropriate or not, and how we will react in return.

She goes on to explain that, “we all have ‘limits,’ and we all experience violations of our limits. Most of the time, people are not trying to violate your limits–they just aren’t aware of what they are. Sometimes, this is because we are not clear with ourselves or other people about what we want or need.”

This can happen often with our finances. It can look like spending more money than you’re comfortable with when out to dinner with friends, letting folks borrow money too frequently, or having different calculations about how much a group experience (i.e. trip) will cost. These situations can all feel like violations of your own financial wants and needs.

However, like Earnshaw noted about boundaries, these instances when people push your financial limits often aren’t intentional. Many times, they can arise from miscommunications about budgets or spending expectations! But that just means learning how to set financial boundaries is all the more important–so that we can prevent resentment and hard feelings over time.


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When and how to establish financial boundaries in your life.

Talking about money used to be taboo–thankfully, however, conversations about finances have started opening up. A 2021 survey form Bank Of America said that “compared to other generations today, millennials are even more comfortable talking with friends about all types of financial topics.” For example, the survey found that folks are more open to talk about changes in life due to financial concerns: 72% today versus 66% 20 years ago.

Hopefully this means that having an honest conversation around financial boundaries is becoming easier for folks. However, if you’d like help with how to go about establishing them in your life, here are some tips about setting boundaries.

As a general rule, it’s always best to establish boundaries ahead of time if you can. For financial boundaries, this means establishing how much you are comfortable spending on something (i.e. on a night out) before–so it doesn’t have to be a topic of discussion once the bill arrives. Understand that boundaries are about you, not other folks. Licensed therapist Rachel Zar, LMFT, CST gave a great piece of advice on boundaries recently: “It’s about what your action is going to be instead of relying on someone else to do an action that’s within your boundary.” Essentially, boundaries are about establishing what you’ll be doing in a specific situation, such as how much money you’ll be spending on a group trip or presents. You can’t control other people’s behavior, only your own–and that includes spending habits. Be intentional. Boundaries require you to think about what your specific needs are. And that’s hard to do for finances if you’re not adequately acquainted with your financial goals! You may not be inspired to set strong financial boundaries if you’re not clear as to why you’re doing so in the first place. For example, if you know that saving money is a financial priority for yourself this year, it will be much easier to set spending boundaries down the line.

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Setting boundaries (be it financial or otherwise) can feel daunting at first. But the more you do it, the better you’ll become at it. As Earnshaw noted: “The more we set boundaries, the more we recognize them. In setting boundaries, we help people show up for us, and we also become better at showing up for them.”

The takeaway.

Boundaries are healthy, and can even help us avoid interpersonal miscommunications. The same is true for financial boundaries, which can help you grow in our personal money goals and build stronger relationships with those around us.


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