Why I Don’t Loan Family or Friends Money

Don't Loan Money

We have all been there. We have the cousin that needs a quick loan until payday or the brother that has a great business idea but needs a loan to get his idea off the ground. I want to help my family and friends but I do not loan money to my family or friends……I give it.

Loan vs. Give

A loan is money that is expected to be paid back, most of the time with interest. Since we are talking family and friends, there may not be interest add to the loan. Giving is to freely hand over the money without expecting to be paid back. The key is to not expect to be paid back. Expecting payment is the demise of the loan to family and friends. Let me tell you why I don’t loan money to family and friends.

I don’t want to ruin relationships

If you expect to get the money back, you may often question your friend’s behavior. Do they really need to buy a round at the bar when they still owe you money? What about that new car they purchased and still haven’t paid you back? I know this is shady behavior but it is the real world.

Giving your friend or family member the money will ease, or even erase, resentment that may build up. No resentment means a kept relationship.

I control my budget, not them

Loaning money that I will still need at the end of the month is not the best idea. I specifically have a budget that I must follow in order to reach my goals. If my budget is blown by a loan that was never paid pack, I am the one responsible not the friend.

“Hello bank, I cannot pay my mortgage this month because my sister said she would pay me back the money I loaned her. As soon as I get payment from her, I will pay you.” I’m sure the bank would understand (NOT)!

I enjoy peaceful sleep at night

When you loan money, you have all these “what ifs” keeping you up at night. Finances can be very stressful. While your friend or family member is sleeping peaceful because you have solved their money problem, you have created one for yourself.

Don’t forget: ruined relationships and an unbalanced budget can cause sleepless nights too. In order to avoid these common problems when loaning family money, just give it. Give what you can so you can still help a friend and stay on track for your financial goals. Don’t give away more than you can afford, your friends and family will understand. They will be happy just to get some help.

Has money ever ruined a relationship for you?


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