Lending money to friends is a unique situation and a difficult decision to make. Even if you are the best of friends that have known each other your entire life, lending money can harshly affect a friendship. There is a positive and negative side to lending a friend money, read further for more details on how to deal with friends who borrow money.
The Positive Side to Lending Money to Friends
- You are being helpful and providing your friend with a temporary solution to their situation.
- You are saving your friend money because they don’t have to pay interest, if they got a bank loan they would.
- You have the extra money so why not help a friend in need.
- You give the money to your friend as a gift so they can get on their feet financially, that avoids them asking for more money in the future.
- Your friend is extremely thankful and it makes your friendship even stronger.
The Negative Side to Lending Money to Friends
- If they don’t pay you back it causes strain in your friendship.
- They forget to pay you back and you have to confront them and behave like a bill collector.
- It affects your own financial situation in a negative way.
- They will most likely ask you again in the future.
- Your friendship ends due to tension from your friend not paying back the loan.
How to Lend Money
Friends who borrow money are obviously in a tight spot or they wouldn’t risk asking to borrow from you. All of us have a soft spot in our hearts for our good friends and we want to help them as much as we can. Ask yourself these five important questions before choosing to lend a friend money.
- Does my friend really need the money? Is your friend in need of serious financial assistance to pay their mortgage, or are they the type of person that barrows money for frivolous things that are not necessary? Make sure your friend really needs the money for an extreme situation such as their mortgage, food and other important day to day necessities.
- Can I afford it? Before you say yes to your friend out of the goodness of your heart, be realistic, sit down and go through your own finances and be absolutely sure that you can afford to have that amount of money missing from your budget. If lending your friend money is going to make your car payment, electricity bill late or cause any other type of financial problems, it’s highly recommended that you refuse to give your friend a loan.
- Will it affect my family? If you are going to be taking food out of your children’s mouth and causing hardship for your family, it’s not a good idea to lend your friend money at this time.
- Will I get it back? This is an answer that you will never know for sure; when lending a friend money always have in mind that there is a fifty-fifty chance that you will receive the money back.
- Do I feel comfortable with this? You should feel mentally and financially comfortable when lending money to a friend, you should be able to give the money away and not have it affect your financial stability in any way.
Dealing with friends who borrow money is not easy, but it is achievable. Once you do make the choice to lend the money to a friend, it’s best to think of it as if you were giving them a gift and never expecting to receive the money back. If they do pay you back then it will be a welcomed surprise, and if they don’t pay you back, well your weren’t expecting it anyway and there are no ill feelings towards your friend and your friendship still remains in good standing.
If you like our writing today please dont forget to share!
***Photos thanks to Tax credits & 401K***
You must log in to post a comment.