It will probably happen to you at some point. Especially if you seem to be pretty good at managing your money. A friend or family member will approach you and ask to borrow money. This can be awkward. It’s hard to know how to respond on the spot. So, I encourage you to read this post and prepare yourself ahead of time for when this tough situation arises. Should you loan money to family or friends?
Should You loan money to family or friends?
The Simple Answer…
NO.
When a loved one asks to borrow money, you may feel that it is your duty to help them. But the truth is, it’s never a good idea to loan money to a friend or family member. Here’s why:
When you loan money to a loved one it changes your relationship with that person. There will probably be an awkwardness between you and that person from that moment on.
You will know that they owe you money, and you’ll associate some type of feeling with
that (pity, resentment, sympathy, bitterness). Just as importantly, the person who received the money will have their own feelings about borrowing the money from you. They might feel uncomfortable and stressed around you because they know that they owe you.
They might not pay you back. If they’re having a hard time financially right now, it’s likely that it may continue. They may desperately want to pay you back but be unable to.
If they do pay you back, it might not be on time. And then the super uncomfortable situation of having to ask for the money back arises. And the awkwardness continues and it isn’t a good thing for anyone involved.
What you should do instead
If you can easily afford the amount of money asked for, without any impact on your financial situation (ability to pay your bills, buy groceries, etc.) AND you agree with the purpose that the money is going to be used for… give the money.
If you’re in a solid financial position and your loved one is going through a time of struggle, give them what you can. Give the money freely, without expecting anything in return. You’re loved one will likely promise to pay you back in the future, and (of course) that’s fine. Just don’t expect it.
Should their financial situation improve in the future and the can return the money, that’s great. Maybe this will happen and maybe it won’t. Your generosity shouldn’t be dependent on what the future holds.
Giving to others, especially those that we love, makes us feel good. If you have something that someone else needs, and it wouldn’t affect you very much to give it to them, you’ll probably feel glad to share it.
Giving freely, without any expectations, is that only way to help your loved ones financially without the awkward uncomfortable feelings involved in loaning money.
This is really important…
If you cannot afford to give the money away–if it would impact your financial situation–do not give it away. Explain that you cannot afford it. Don’t let pride stop you from opening up to your loved ones, especially if they are struggling. It may help them in a different way to know that you might understand their struggles.
I have a member of my family who is too generous to others. She works very hard and barely makes enough to support herself. But, she has such a big heart and other people are always taking advantage of her. Her friends often ask to borrow money, and although she cannot afford to lend it, she gives it to them. She rarely gets the money back and it really affects her ability to provide for herself.
If this story reminds you of your own situation, I want you to know that you should be putting yourself first. It’s okay to make yourself a priority sometimes. You need to make sure your needs are met before you can give to others. It’s like being on a plane and listening to the flight attendant tell you that you have to put on your own oxygen mask before you can help other people put on theirs.
You are important. If you don’t take care of yourself, who will?
Want more? Here are some of my best posts:
How to Talk to your Friends about Money
The 1st Step to Saving More Money
How to get a Good Deal on a Car
3 Tips to cut your Electric Bill in half
How to Get Paid for Shopping Online
You can read more about my story here: A Spender and A Saver Fall in Love
My husband says, if they need it, it means they can’t pay you back. So, don’t plan on loaning anything you don’t want back.
Wonderful suggestions here! I like that you said that if you can afford it, to give it. I’ve heard of so many situations when people have loaned money, not been paid back and it ruins the relationship.
Thanks for sharing (and for linking up to the #SHINEbloghop).
Wishing you a lovely day.
xoxo
It’s such a shame that people will take advantage of a generous soul. I hope your post will encourage more people to stand up for themselves. It’s wonderful to be generous, but you have to be in a good position to help others by helping yourself, first.
I’ve always believed that any loan to family must be looked at as a gift. If they pay it back great but if not i was intending it as a gift anyway.
Great post and I concur. NEVER loan money to friends or family. It ends badly more times than not.
Found you via Turn It Up Tuesday.
What an excellent article! My dear 44-year-old sister-in-law recently died VERY suddenly. She had borrowed money from my parents-in-law. Now that she has passed away, this is a very big deal to my father-in-law. He is now upset because my brother-in-law will more than likely never pay him back. The whole thing is a big mess.