That being said, I have been burned badly in the past by lending money to a certain person, and I know never to lend them money again. However, I have also loaned money to a family member who has paid me back and even gave a large amount in “interest” for giving them money to borrow.
If you do decide lending money to a person is something you need to do, here are my tips:
Just say no if you can’t afford it.
If someone asks you for money and you can’t afford it, then you should just stop right there. I’m not saying that everyone should be selfish and only think about themselves, but if you cannot afford it then you need to think about your livelihood as well.
See if there’s something else you can do.
Instead of giving them money, see if you can help them in another way first. Maybe you can help them out such as helping them find a job, maybe helping them with their resume, and so on. If something is wrong with their home or car or they need some other sort of repair, maybe you have some sort of skill that you can help them with the repair.
Consider that loan a gift in your mind.
Lending money to a family member or a friend may not always work out in the best way possible. They may not be able to ever pay you back, or they may decide not to pay you.
Money is a weird thing, you never really know how someone will behave even if you think you know them 100%.
This is why you should always consider a loan a gift in your mind. You don’t tell them it’s a gift of course, but this is so that you don’t miss the money in case they don’t pay you back. You can never 100% guarantee that they will pay you back, and you should always remember that.
Have everything written down.
If you decide that you will lend money to this person, you should have everything written down. Write down how much you are lending, how much you expect back, when you expect it back by and so on. This is so that everyone is accountable and no one forgets any of the details.
Have you ever loaned money to a friend or family member?
Image via Flickr by omaromar