Lending money to just about anyone is an inherently sticky situation. Nonetheless, when someone you love needs assistance your first instinct is to do what you can. And if you’re in a position where you’re doing well financially, you might feel slightly obligated to lend money to friends in financial stress.
While your heart is no doubt in the right place, deciding to lend money to friends could land you in a stressful situation your part.
Even under the best of circumstances, lending money more often than not seems to go awry. Before offering up funds to one of your friends, take a look at these three reasons for why you might want to reconsider.
1. They Might Come Back for More
Although you might agree to help out this once, that doesn’t necessarily mean that your friend won’t ask again. In most cases, if someone has asked once, they’ll no doubt ask again.
By lending a friend money, you in a sense open yourself up for business and imply that in the event of future financial crises, you are someone your friend can immediately go to for money.
In the end, lending money once could lead towards a neverending cycle that you no doubt don’t want to begin.
2. You Don’t Necessarily Solve the Problem
If a friend is in financial trouble, that could mean that their financial habits are less than stellar. While everyone makes mistakes and certain circumstances might not always be within their control, lending said person money doesn’t exactly help them out.
If your friend is someone who consistently has money woes, merely lending them money only serves to perpetuate the problem. Instead of doing so, help them find ways to adjust their finances and begin practicing smart financial habits.
3. It Could Dissolve Your Relationship
Whether you’re forced to say no, which causes your friend to become offended, or are then put in the award situation of having to constantly ask your friend to pay back your loan, lending money to friends will only cause problems in your relationship.
You could find that you have different opinions, disagree on when the loan is paid back or find issue due to the fact that you yourself needs said money. Moreover, the tension it can cause between you and your friend, especially if your friend feels like they owe you, might ruin the relationship regardless of how it plays out.
Telling your friends no in any situation is never easy. Of course it’s even worst if they’re in a tough spot and need the help.
There’s no doubt that you run the risk of your friends getting angry with you if you decline financial help. However, if you simply make it a practice and explain your reasoning, more often than not, I think you’ll find that they understand.
After all, when it’s all said and done, you’ll both be glad you said no if only for the sake of your friendship.
Have you ever tried to lend money to friends? How did it turn out?
Photo courtesy of: Joe Pizzio
Wise Dollar
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It’s always tricky when people ask to borrow money, whether you say yes or no. Would you feel differently about if it were a family member?
I would like to say no I wouldn’t feel differently, but I have loaned money to family. It does make the relationship kind of awkward at times.