Loaning Money to Friends and Family
Written by Cathy
I have a simple rule when loaning money to friends or family. I don’t. If a friend or family member asks to borrow money, I give them a gift. I never give them anything and expect it back. I never ask about it. I don’t have strings attached. I don’t want them to become indebted to me. I do not want to be their master, and they my slave. I don’t want to be a loan officer. I want to help them.
That doesn’t mean I have never said no. Sometimes, there is a reason why I do not want to give a gift. I do not co-sign loans, for example. If they need a loan, then they need more money than I would feel comfortable gifting. I had enough trouble with my own debt. I don’t need to be entangled with someone else’s.
A funny thing, though. While I never expect what I give to come back, it always has. Sometimes it is in a couple of weeks, sometimes it has been several years. Truth is, if there is any friend or family member I loaned money to that didn’t pay me back, I don’t remember who it was or how much. I think everyone has eventually paid me back, but I don’t know. And don’t care.
I believe this is because what I gave them to help them pay the bills that month was given out of love, and not obligation. I never lectured them on their irresponsibility or tried to teach them a lesson. Thus, because what I gave them out of love and respect, they gave back to me. They remembered how I treated them in need, and thus, when they had better circumstances, they remembered me.
When I have asked to borrow money, my friends and family gave it to me without question. Why? Because when I borrowed, I always paid back. They knew I am reliable, and I wouldn’t ask if it wasn’t really important.
8 Responses to “Loaning Money to Friends and Family”
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Interesting topic. I agree that if a close friend or family member asks to “borrow” money, it’s probably best to simply give it to them as a gift. It removes the obligation of paying back and therefore removes the opportunity for a bad situation. I did this once and even though I presented the money as a gift to a family friend, they paid it back without even asking for it. Good advice indeed.
Hi UKcards. Yes, it’s unfortunate that money changes the dynamic of a relationship. Many people who have given personal loans later regret having done so.
Follow up question: Has anyone loaned money to a friend/family member and had it not affect your relationship? How did you make it work?
Cathy, my wife and I have adapted this exact same philosophy and it has worked wonders for us. Isn’t it so amazing to not have to struggle with the decision anytime some one approaches you? My friends know we don’t “loan” money, but they know they’d always have food and a place to stay if they needed it. In addition, we’d bend over backwards even financially if a friend had a true emergency… we would just make it a gift the same as you do.
Great post!
Absolutely, Baker. My friends and family will always have food and a warm bed. There have been times when I needed the same.
I admit, I have not been on this webpage in a long time… however it was another joy to see It is such important topic and avoided by so many, even specialist. I thank you to help making people more apprised of possible problems.
I appreciate the helpful tip you essay in your post. I will bookmark your blog and have my son check up here regularly. I am rather sure they will learn a lots of new stuff here than anybody else!
John C: It is such a sensitive topic, and you’re right, so many people want to avoid it. It’s sad to say, but blood does not run deeper than money…unless you purposefully intend for it to be that way. For a current event demonstration of this effect, look at what happened with Nancy Kerrigan’s brother in the news. Her parents loaned him money for his mortgage amongst other things, and it only caused pain and suffering for the family, with a tragic ending.
Jack L: Glad you found this useful! Thanks for bookmarking my blog – I’ll work on having more regular updates. Appreciate you visiting!