SHOULD YOU LEND MONEY TO YOUR RELATIVES AND FRIENDS?
Have you ever supported your relatives and friends financially? Did they honor your agreement and refund the money?
Most of the time, friends and relatives do not repay the money they owe you.
What do you do when a relative is in need and requires you to lend them money?
- Learn to say no
Many people lend money because they are not able to say no. They will have thoughts on how the other person will take them. Some people know they should say no but fail to say it.
Most people want to look good and avoid saying no to a relative or friend asking for money.
- Have an agreement
When you lend money to someone, you are naturally aligned with that person. The alignment is internal, while the deal is external.
When lending money, despite having a good alignment, you should have an explicit agreement with each other. The agreement is having a mutual understanding of the loan and repayment.
If you fail to have an explicit agreement, you may suffer from disappointment from the other person’s expectations.
- Always know your financial situation before lending
You may have some money to lend but at the expense of your needs. Only lend what you have after paying for your needs and financing your investments. Don’t let your emotions lead you to the point of lending money when your financial situation does not allow it.
If you lend when you don’t have surplus money, it will directly affect your financial life.
- Have a written agreement
A written document is the most crucial thing when lending money. Let it be legal so that you can see how genuine is the person who requires the loan.
A genuine person will not have an issue with the legal document.
Writing eradicates all the confusion regarding the loan.
- Set up mechanisms of reminders
Both the lender and borrower should agree on the time for reminders.
You can remind each other through calls and emails or set a reminder on your calendar.
Both of you should stay in communication, so it doesn’t become difficult to recover your money.
- Never entertain the behavior of people failing to pay you
If you have lent money in the past and were not refunded, it may be that you never asked the person for your money.
Many people stop lending money after encountering bad experiences.
Always do a follow-up to make sure your money is paid.
Conclusion
If you have to lend money to someone, always have a clear understanding of the repayment method and the duration the loan will take.
When lending money, forget about relationships, whether a relative or a friend. Be firm with your decision.
Protect your hard-earned money at all costs. Even if the money you have loaned out is tiny, always get it back.
These steps may seem to make you selfish, but at the end of the day, your money will be safe. .