Should You Loan Friends and Family Money?

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loan friends and family money

When it comes to loaning family members money, it can be a sticky situation for all the parties involved. Especially when you’re the oldest sibling of the family, like I am.

I feel somewhat responsible for the lives and financial well-being of all my brothers and sisters (and their kids). When I’m not getting asked for financial advice, I’m getting asked for money.

Here are some simple tips I’ve learned when loaning friends and family money.

1. Make a firm decision

If you don’t want to loan someone the money, or you’ve had a bad experience with them in the past then just don’t do it.

No one should force you into a decision with your money that you aren’t comfortable with. If your answer is yes, then treat it like a calm business transaction, but if the answer is no, then be kind but firm about it.

2. Set conditions and guidelines

Sometimes I don’t mind loaning or giving my friends or family money, but only with certain conditions (like if they need the money for food, it has to be used for that purpose).

If they don’t want to accept the conditions then they don’t have to accept the money. It’s just that simple.

3. Barter or ask for an exchange

Not everyone can pay back the actual cash but maybe they have something else to offer. Ask for something in exchange, like yard work, cleaning or babysitting.

Bartering is a good way for each party to get something out of the transaction, in a peaceful manner.

4. Remember what really matters

Many times loaning money to a relative can create a lot of tension and stress. I’ve experienced strain on relationships within my family over $20, and to me that’s just not worth it.

It’s important to focus on what really matters; the relationship with the person and not the money. You might not ever see the money again, but it’s better to forgive the debt than lose a good relationship.

However, in the end money and family don’t mix well. In the spirit of fairness, you might just want to say no when people ask to borrow cash, or just choose to give them the money instead of loaning it. There’s no need to feel guilty about your choice either way.

I try to keep my family, friends and their needs in perspective. I am willing to help them, but I’m not supposed be bailing them out all the time.

They’re adults with their own lives and families, and they are responsible for the decisions (and consequences) they make, just like I am.

Do you loan your friends or family money? Why or why not?


  1. Kylie Ofiu says:

    Great advice. We loan to my family as they always repay. Not long after we were married my husband lent his dad $120 (he called us the day we got back from our honeymoon!) I told hubby to write down all the money he had ‘loaned’ to his family over the years. It was close to $50,000!!! He could not believe it.

    Needless to say, he does not lend to them any more. We give money to his mum when she needs it and we can afford it, other than that, for his side we always just help in ways that do not involve money.

    Money has never been an issue with my family. We are all happy to lend and all repay.

  2. Carrie says:

    That’s great to hear how you and your husband handle the different sides of the family. I have siblings that pay me back without any problems, and then I have other siblings that never pay. So I just give them the money, like you do with his side of the family. Thanks for commenting.

  3. Good advice, Carrie. Nowadays I generally don’t lend anyone money unless they really do need it or to help with a cash flow issue if it’s someone I really trust. I once lent a friend (I guess about) $650 to buy a laptop when I was a student. He said he’d pay me back in 3 months. It ended up taking 18 months to get the money back. He spent more money on himself before paying back his debt and I only eventually recovered the money by getting him to pay for food, drinks, tickets etc. when we went out. What a nightmare. This is why I pretty much don’t lend anymore. It can put too much strain on friendships.

    • Carrie says:

      I feel exactly the same way. I hardly ever lend people money, as I will either just say no or just give it to them. Like you said it puts too much strain on the relationship and makes everything tense between everyone. Thanks for the comment 🙂

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