This is a question that comes up a few times in the course of a lifetime, so I wanted to take some time to explain why I believe lending money to a friend or family member is not a good idea. I’ve seen this tear what were once wonderful, life-giving relationships to the ground. So here are some of my thoughts…
When you lend money to a friend you become a looming financial authority over the borrower. The borrower is in debt to you now, and most of the time they won’t be able to pay you back right away (they had to borrow money from you which indicates they may not have much to spare). The lender inevitably starts feeling taken advantage of when the loan is not paid back in a timely manner. This leads to him judging the financial moves of the borrower.
Why did they take that vacation instead of paying me?
Why aren’t they looking for a job?
Where is all of that income going?
The list goes on.
The relationship between the two parties begins to suffer. Eventually it’s just business. The trust & friendship are lost. This is especially difficult to deal with between family members. So what is the answer if someone needs money and you want to help?
Don’t lend the money, give the money.
I believe in having a generous spirit. It’s taken me awhile to get to the point where I can give money with no expectations of ever getting it back, but it can be done. Being frugal was a significant barrier to learning how to be generous. Lucky for me, Nathan is an extremely generous person with his finances. He has helped teach me over nearly 6 years of marriage that giving to others is worth more than saving to buy something for ourselves.
That being said, the first step to being able to give generously is to get your heart and mind in the right place. You can’t give with a miserly spirit or you will just end up resenting those you are generous with, wondering “when will I ever get that repaid in some way?” It doesn’t work like that!
Secondly, once you are in that mind frame, it’s time to give. I’m not saying to go out and give all of your friends and family money, but look for ways that you can help out if it’s needed. If someone is brave enough to ask for a loan, you counter them with an offer to take the money with no strings attached.
The money theirs and you’ll never ask them about it again. This is the third step…don’t expect anything in return. This is crucial to keeping a relationship in tact when dealing with money.
Maybe you are in a situation where you’ve lent money to a friend or family member and you aren’t being paid back the way you expected to be. I’d like to throw a challenge out there to LET IT GO (cue Idina Menzel and the “Frozen” soundtrack 🙂 ). If you’ve gone this long without having the money paid back, would you survive if you never got it back? Probably. I know it doesn’t feel good, especially if it’s a large sum of money. But maybe it’s time to free the borrower, especially if your relationship has suffered because of it. It’s time to think about what matters more: people or money?
Have you ever experienced a situation like this? Feel free to share! See you guys next week.