4 tips for lending money to family and friends
Friendships and well-established relationship aren’t bought by money however, it can certainly be wrecked by it. Tell us, how many times have you lent money to a family member or a friend and how did it turn out?
Yes, it might have turn out smoothly but chances are, you had a few “When will they pay? It’s been weeks,” and “I should’ve helped them fix the problem rather than provide them with money,” pop in your head. Surely, you’ve heard of other more horrible similar stories. For the meantime, dig deep into these four rules of lending to your friend or family member.
- See if there’s any other way you can help
Before offering your hard earned money, ask your borrower first if there’s any other means you can help them before handing the cash they need. Maybe you could help them sell out some stuff they no longer need. If they need cash to pay the bills, offer to pay their bills directly.
There are lots of ways you can help a friend or family out. Find out what the problem is, you have the right to know since your hard earned money is at stake and your personal relationship.
- Only offer what you can afford to lose
No matter how trustworthy a person is, when it comes to money, things can get out of hand. Anything can happen after you lend them the amount they need and when it comes to repayments, anything can happen such as—fail to pay you back on time or not at all.
Once you lend them the money, accept that you might not get it back as originally planned, or at all. Given this, only offer the amount you can accept to not get returned and don’t hold onto it too much for it may only jeopardize your own financial situation. Or worse, your relationship.
- Make it official
You might think there’s no need to make a written contract out of your terms and conditions since they’re your friends or member/s of the family but you ought to know better than that. A handshake agreement and promises won’t guarantee you they’ll repay.
If you want your money back, make a contract. If the amount is a little too high to risk losing, have it notarized. Ensure that both of you agree to it and signed the contract.
Since you’re on it on making it official, set repayment terms and timelines so there’s no excuse for the borrower to say “you’ve forgotten to remind me,” or “I thought you said next week.” if they really have pure intentions of paying you back, they’d have no problem setting up repayment terms and having it notarized.
- Learn when to say “no”
Is the friend or family member borrowing money from you the one you wouldn’t trust even a dollar with? Or are they heart-warming and genuine? Can you already imagine the impact this would bring in the family or in your relationship?
Remember, you’re the decider here and you get not only to say “yes” and lend the money, you also can say “no.” they may blow a sob story or throw a tantrum once they hear it but if you don’t have anything to lend or just don’t trust them enough to lend any amount, learn to say no. know that it’s okay to say “no.”
Have you ever had an experience of lending to your friend or family member and had trouble with repayments? How did it affect your relationship? Share us your tips and advices!
About Chie Suarez
Chie Suarez has spent time figuring out ways on saving money and stepping away from her go-to retail stores. She then became a writer for Speedy Money which offers hassle-free loans services.