When someone you know comes to you asking you to lend them money it puts you in a tough situation, no matter who it is. You feel like the smart thing to do would be to turn them down, but you don’t want to see them struggling. So you battle with the question of whether or not you should do it. Remember, when loaning money to someone, never give out money that you aren’t prepared to lose forever. Here are some things to help you make your decision:
Really Consider Your Answer
Lending money to friends, family, or coworkers very frequently comes with complications. While you might feel bad or worry that it might cause some strain if you say no, consider how difficult the relationship could become if they fail to pay you back in a timely manner. If this is a frequent occurrence saying no might just be the best thing for both of you. If this is a one-time thing and you know just how desperate they’d have to be to come to you think about if you can actually afford to lend them money without putting yourself into financial troubles.
When loaning money make sure you have an agreement in writing for what the terms will be. Decide on how much you will loan them, a period for when the loan needs to be paid back, and if you’re going to be asking for interest. While a written contract might make it seem a little more formal than your friend had been hoping for, it’s the best way to protect you and your interests. When the due date comes for your friend to make their payment, hold them to it. Make sure your friend is going to use the money for the important thing they need it for or else loaning them anything is just a waste, and they’ll probably be back soon asking you for more.
Try to Find Other Solutions
Before you start reaching into your pocket to loan out some money, think first about other possible solutions. Maybe you can offer them other ways to help, such as telling them about other legitimate ways that they can earn some money or by offering to help them with their budget for the next few months so things don’t end up getting so tight. If your friend has bad habits that frequently mean they have financial problems you wouldn’t want to enable them to continue down that path.