Lending money to family and friends is a bit like walking a tightrope, and it’s very easy for things to go wrong. With the ongoing recession affecting so many people, you might be tempted to lend money to a loved one in hopes of helping them out. While this might sound like a good idea in principle, doing so can be problematic. The first step in deciding how best to proceed is to find out why your friend or family member is having a difficult time. If they have a history of being responsible with money and are just experiencing a temporary setback, you might consider helping them out. If, on the other hand, they consistently have trouble with money, you should think twice — you could do more harm than good. How? As hard as it is to admit, some people just aren’t good at handling their finances. They constantly live paycheck-to-paycheck and dont seem interested in (or able to) change their habits. If you lend them money, you’re jeopardizing your relationship, and you might also wind up enabling their bad spending and non-savings habits. Thoughts on Lending Money to Family or Friends If you dont have money to lose, then dont loan them money! We all have responsibilities of our own, so dont loan out money that you cant afford to lose. Make sure you have ample emergency fund in case your family has an emergency of its own. Offer to help them with budgeting. This can be a tricky one, as most people aren’t willing to share their finances. Even so, you can show them how you budget, and maybe share some helpful tips. If you end up making a loan, put everything in writing. Decide ahead of time when and how the loan will be paid back (e.g., lump sum or monthly payments), and have both parties sign the agreement. Make a copy and keep the original. Be very careful I have learnt you destroy relationships by lending money out and then they forget who you are and who they owe.
Posted on: Sun, 11 May 2014 20:22:21 +0000
Trending Topics
Recently Viewed Topics
© 2015