With the holidays approaching it is perhaps normal for everyone to be feeling the anxieties and pressure of upcoming expenses and bills. As a result, you may consider loaning money to family if the need should arise or similarly be faced with asking family members for a small loan to get you through to the New Year. This is a touchy situation for many and the famous quote “neither a borrower nor a lender be” may ring loudly in your ears. But, what is the right thing to do and how do you handle the situation should it arise? If a family member asked you for money, what would you do?
Probably the first thing is to decide whether a “loan” really means a loan or if it just a convenient term being used for “no intention of paying back.” Money has the capability to divide the best of friends and family members and nobody wants to feel taken advantage of. If a family member asks you for money and you have it to give, it is probably good for karma’s sake to lend it to them as long as some terms are expressed. The ideas of adding interest or coming up with payment terms seem a bit extensive for family members, but this largely depends on the borrower. If the borrower is someone you trust and feel that in good faith will pay you back when they are able, most people would suggest leaving it at that. If the borrower is your consistently unemployed brother in law who spends his money on cigarettes and beer rather than paying his electric bill; it may be best to just say you don’t have it to give. This way there will be no issues afterward or underlying resentment when you see him with a new Ipod while he still owes you $500.
Loaning a family member money is something that should be done especially if kids are involved. From time to time, many families will experience financial dilemmas and you have to realize that the fact that they even asked shows the importance of the matter to them. While it is probably polite for the borrower to explain why they need the money, it is often best not to ask. Normally answers like this express themselves in time anyways. For most people the need to borrow money from family is embarrassing and makes a loud statement that makes them feel like a failure long before they asked. Try to be considerate of their feelings.
Some good advice about loaning money to family is to always give it without the real expectation of having it paid back. Sure, chances are if your family member has integrity they will, but many people borrow from family with the silent agreement that it is the last financial obligation on a list of many. Again, terms in the beginning may be a good idea if you really want to see your money back in your wallet. If you don’t express terms or make some sort of amicable and easy payment arrangement than the borrower may take that as indication that this money is really a donation.
There are plenty of people, and you know who they are – that borrow endlessly! When it comes to these people, you should live by the motto “fool me once, shame on you! Fool me twice, shame on ME!” Use common sense and you can always say no. If just plain no doesn’t feel good than making up some financial commitment of your own that is pressing may be the road to go.
While loaning money to family in a time of need is a nice and familial thing to do it should never become a habit. You don’t want others to see you as an endless fountain of money and there comes a point in everyone’s life where they need to become economically responsible. Keep in mind, that what your other family members do is really none of your business. If your aging grandmother always caves and lends money to everyone that asks her it isn’t your place to try and put an end to it. If she is being taken advantage of, chances are as long as she her wits are about her, she is okay with it at some level and has it to give. Staying out of it is the best option all around!
Perhaps the biggest borrowers are grown children. They may see their parents as an endless well of money and instead of learn how to make difficult choices and decisions depend on their folks to bail them out. While it is difficult to see your child drowning in debt, it is probably wise to help them once or maybe twice. After that, you are not doing them or anyone else in your family a favor by constantly loaning money. Obviously, if a family member has just suddenly lost a job or been victim to a traumatic event and you sincerely care about them, helping them out by paying a bill or two for them is a nice way to lend money and ensure that it is going to the cause rather than something else.
People are not banks. While $5 bucks here and there isn’t going to kill anyone, being used for financial gains doesn’t feel good any way you look at it. If you have something to offer or give, you may be inclined to loan money, but if you don’t – it is best that you hold onto your checkbook and take care of yourself first. Otherwise, you may end up being the one needing money from family members. Consider at some point that family members may have other options that are more binding like taking out a loan of sorts or asking for a co-signer should they need it. This may be a safer way to offer assistance than to withdraw money from your own accounts. Financial experts suggest that people who take money out of savings with full intention of putting it back, rarely do! If your nest egg is just beginning to warm the eggs offering or loaning it to others could be a catastrophic mistake for you and your family.
While no real question here has really been answered, the bottom line is this. Pay attention to how you feel if you are asked for money from someone and consider the money as never being returned. Try to own the feelings you will have afterwards and whether or not you will be resentful later or not. If you can live with it, than helping family is a great thing to do with no strings attached. If you can’t live with it because you feel the ‘borrower’ is unreliable or irresponsible, excuse your self from feeling guilty and just say no. No matter what you choose, money comes and goes and it is always from Peter to pay Paul. That being said, it is a commodity that should never stand between the hearts of people.