Should You Lend Money to Friends and Family?
March 05, 2011, By Steve Thompson 2 comments
Most of us haven't gotten where we are today without some form of assistance. Your spouse, parents, mentor, co-workers, supervisors—you've received a boost from someone over the years. So when a friend or relative asks you for money, you should do your best to give back, right?
Not So Fast
Lending money is not always the best way to strengthen relationships. In fact, it can destroy them. This is why the experts advise you never to lend money you aren't prepared to lose.
Most guys won't blink an eye if a buddy asks to borrow 10 bucks to get a hot dog and a beer at the ballpark, but what if a friend or family member asks you for $100, or $1,000? The pressure increases as the amounts get larger, and you need to have time to think through this decision.
Before you say sure, no problem, consider the potential ramifications. How much do you trust the person who wants to borrow money? What are the chances of getting it back? And is this a relationship you're prepared to lose on top of the cash?
Always Ask Why
Your Dad taught you never to ask people about money; it's rude. But when a friend or family member is asking to borrow money, you must ask why. Is it to fund a last-minute mortgage payment? Or to settle a gambling debt that will only multiply next month?
Knowing why you're lending money will help you make the decision. You can determine whether you're enabling poor financial decisions or simply pulling a loved one free from an unexpected bind.
If you're concerned about where the money is going, offer to make the payment directly to the mortgage, utility or credit card company.
Need more informaiton? Keep reading.
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