Closeup portrait of a male hand holding US dollars
Have you ever loaned a friend or coworker $50, $100, or more?
Did you notice that things between you felt a little strained until the debt was repaid?
That wasn’t your imagination.
When you loan money to someone, friend or family member, it changes the emotional fabric of the relationship. King Solomon, thought to be one of the wisest men to walk the earth said, “The borrower is slave to the lender.”
You may say, “Lending my brother money isn’t going to change our relationship.” Yes, indeed, it will; whether you want it to or not.
Most of us want to help our friends and family when a need arises, financial or otherwise, and that’s a good thing. However, extreme caution must be used in the area of lending money. In fact, I think if you do lend money to a friend, you should go into it thinking that the money is a gift, not a loan. If you can’t afford to give your friend the money, then you can’t afford to lend it to them. Not only will you risk the relationship, but you’re risking your own financial wellbeing.
You also can’t afford the emotional and relational consequences of the loan potentially going bad. I think most of us have experienced this situation at least once. We lent money to a roommate, cousin, or brother-in-law and they never paid us back. In fact, you might be getting mad all over again just remembering the incident!
If you cherish your relationship with this person, you either need to explain to them with love that you cannot risk your own financial health to help them, or give them the money. Of course, we’re assuming here that this person isn’t financially irresponsible. This isn’t just stressful for the person making the loan; it’s also an emotional burden on the person borrowing the money.
There have been times when I have loaned small amounts of money, fully expecting it to be paid back and lost the relationship because the other person didn’t hold up their end of the bargain. However, when I treat the “loan” as a gift, I’m actually surprised and delighted if the person pays me back. Think about this when you are asking to borrow money from a friend or family member. You’ll likely feel burdened around them until you pay them back the money.
This is why it’s vitally important to save up a “rainy day” fund – so you don’t have to borrow from friends or family member when a financial emergency happens to you.
Christine Luken is the Financial Lifeguard and a veteran Meal Planner. She helps individuals, families, and entrepreneurs design a financial road map to help them arrive at their Preferred Financial Destination. You can find Christine’s blogs, podcasts, and videos on her Financial Life Guard site and her Meal Planning Monday blog.
