Should I lend money to a friend?
It’s always tricky when a close friend or family member asks to borrow money from you. So, how should you handle this awkward question?
On the whole, the answer should always be no. If you loan someone money and they’re unable to pay you back, this can lead to upset and tension that ultimately ruins valuable relationships.
In light of this, the only time you might want to consider lending money is when the amount doesn’t matter to you. Therefore, if they fail to make the repayments, it won’t taint your relationship.
Change your mindset
By this we mean, it’s usually healthiest to assume you’ll never get your money back. If that sits well with you, by all means, give them the green light. Try to see the loan as more of a ‘gift’ that if you so happen to be repaid, it’s a bonus.
This is why we suggest never loaning your precious money to friends and family- especially if you’re trying to save for something. It’s a surefire way to destroy age-old relationships! Even if you as the lender don’t mind, the person you’re loaning to might feel weird about it- particularly, if they can’t pay you back.
What if they don’t pay back?
This concern forces us to circle back to what we’ve already said. You should always go into an arrangement like this assuming you’re never going to see your money again. You both know there’s an outstanding debt, so you need to figure out how to handle the awkwardness.
Here’s the solution: try talking about the loan as if it were an investment. The nature of investing means there’s always an element of risk. Some investments pay off, others don’t. Do your best to remember that. Otherwise, you’ll feel resentment towards the person who hasn’t paid you back which never ends well!