It’s natural, of course, to want to help friends or family in need. Lending money can sometimes turn into an uncomfortable situation, so consider these things before you do so. What things should you consider before lending money to friends and family?
Although lending money to the people we love is something we all want to do in order to help those we care about, there are some tips that you should take into account so that this does not affect your relationship with them or with your partner in a negative way.
What things should you keep in mind before making a loan to someone close to you?
1. Only lend what you can afford to lose
This is the golden rule of loaning money. You should always bear in mind that even the most responsible person you know, can have unexpected problems, and really not be able to give the money back.
This is why you should only lend what you can afford to never see again. This way, if the worst happens, it won’t end up harming your personal finances or relationship.
2. Consider how the rest of your family might react
Even if you have a real reason to do it, it may be hard to not treat all the members of your family the same way. If, in the past you have said no to one of them, saying yes to another may bring trouble. The best way to avoid this is to keep these arrangements private. That way, you can help someone without hurting someone else’s feelings.
3. Spell out the term clearly
You might want to charge interests or you might not. You may be willing to lend money for a long time or you could need to get it back soon. All these things should be talked over in advance and left clear before you loan the money. This way, you can avoid trouble that could be caused by any misunderstanding.
4. Talk things over with your partner
You surely don’t want a kind action to end up in marital distress, so talk this over with your spouse to avoid the number one reason couples fight about. You should both agree so the situation won’t créate friction at home.