Money is a very sensitive issue. It can be a sensitive matter amongst family members, between spouses or dating couples, and even between friends. Many a time, money has ruined many relationships. So if a friend comes up to you and asks if you can lend him or her some money to tie over their difficult times, what do you say?
Is it wise to lend money to a friend? What about being on the other end of it, to borrow money from a friend? Personally, I find it a bad idea to lend money to friends because I worry that it will end up ruining the friendship if things go wrong.
It’s hard to chase a friend for the money back if they don’t voluntarily start repaying the money as promised. Or, when the repayments keep getting pushed back because he or she just can’t find the funds to repay you, you will be stuck in a rut not knowing when you will ever get your money back. You may start having feelings or resentment towards the friend.
Having said that, I have lent friends money when they need it. I personally find it hard to say no, especially if the amount is not very much. But so far, I have been lucky that those who lent from me have always repaid me like they said they would.
But I would imagine that should a friend ask to borrow a large sum of money from me, I would be able to say no although saying no is difficult coming from me. When it’s a large amount of money involved, it’s more believable when you say you don’t have that kind of money as a reason of saying no. But what if your friend knows that you are loaded and will definitely have that kind of money? Well, you can always say your funds are stuck in your many investments.
On the other hand, I think it is even harder to be on the borrowing side. How do you even begin to ask a friend for money? It takes a lot of guts and trust to open up to a friend about your money problems. The fear of rejection is natural in all of us, not to mention some of us may feel more humiliation than others when we have to resort to taking money from friends.
In any case, money is just something that is not easy to talk about. Even between spouses, it’s not the easiest of topics to have a calm and fruitful discussion. Whether you are on the borrowing or lending side, I hope you have the EQ and compassion to handle the situation as best you can without causing a dent in your friendship.
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Great article about the concerns of lending money.
One of the most important aspects of borrowing and lending with friends and family is to protect the relationship.
The easiest way to protect the relationship is to increase the likelihood of borrower repayment.
The most successful way to accomplish this is by (1) ensuring both parties agree to the terms of the loan, (2) getting everything in writing, and (3) receiving assistance from a 3rd party.
We’ve started www.LendFriend.me to meet this exact need, hopefully we can help you also.