On Lending Money to Family Members and Close Friends

What will you do if a family member or a very close friend will lend money from you because they are in need? Will you allow them to borrow money and expect them to pay on time, or would you not expect them to pay at all or would you gift the money instead so that you would not think of collecting it anymore.

Lending money to family members or close friends is one of the things that can cause conflict or issues to some people. Most often, when we lend money to these people, we experience delayed payments or no payments at all because of the many circumstances. I am advised by one friend that whenever a family member or close friend ask for loan, I would allow lending with an amount that I can just take to forget. If it will be returned then good, but if not then don’t think about it anymore.

In an article in How to Lend Money to Family Without Ruining Your Relationship(s), the author cited 9 rules on lending money and the author's points are very relevant. The author emphasized on thinking about the money to be lent, discussing with partner first, lend money that you only have. If somebody borrow and you don’t have that amount, say NO instead, it would be hard that you will be the one to borrow to other agencies or other person and if circumstances will happen, you will be the one to pay for the debts which is not actually your own. I have known someone who experienced this. He lend an amount to a friend and the collateral is their house but that friend run away and left him paying the debt. Worst, the house is sold instead, to pay the loan.

I also like the author's idea of offering other help or alternatives instead if you don't have money available. Maybe referring another solution, a job opportunity or ways like asking help from the government or right agencies especially when it's about medical cases.

And again, the idea of gifting the money instead is also included in the points. I for one experience this many times when my mom had been hospitalized. Most of her sisters and my cousins offered help not expecting for any return and for that I am so thankful. I am also doing the same, especially when someone would lend money for medical purposes.

One interesting point as well is the "withholding judgement". When we lend money, we should withhold judgements with them, especially when they buy new things and they cannot pay you. Or forcing them to do something for you because of "utang na loob" or they are indebted to you. It's emphasizing the beauty of kindness in this kind of situations. Of course, it would not be easy especially, if you lend them a big amount and then they were not able to pay you but they were able to buy luxurious stuff.

But I think, charging them or reminding them about their debt is also not bad as well, especially when you need the money the most at that moment. It should be done in a nice way though. If they cannot pay the whole, then let them pay what they are able to give at that time instead.

Conclusion

Family members and close friends are dear to our hearts, when they are in need, we are really affected and we can be compassionate to them. To be able to maintain the good relationship, be kind in lending money and think about it many times. If investing says, only invest an amount you can afford to lose, then, I must say, lend an amount you can afford to forget.

How about you? What is your stand and experience about lending money to family members and close friends? What are your practices? I would love to know in the comment section below.

Disclaimer: This topic, maybe, is sensitive to others, this is just based on my experience and point of view. We may differ to each other on handling this kind of situation.

Lead Image: Image by Niek Verlaan from Pixabay 

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