It Can Make It Awkward for Family and Friends The risks associated with lending money to loved onesĤ.How you will handle any problems that arise.What each of your expectations and obligations are.What you will do to avoid potential relationship issues.If you’ve already lent money to a loved one, discuss potential issues before things go south. All of that can permanently damage your relationship, whether or not they eventually pay off the loan. The tension between you and the borrower may lead to anger, guilt, shame, and remorse. If your interactions sour because of issues related to a loan, it may be hard to repair any damage.Īnd if the borrower is ultimately unable to repay you, money often becomes part of every interaction you have, taking away from the relationship you’ve built and causing hard feelings. And unfortunately, they can affect how your relationship plays out long term. There are so many ways a loan can go wrong. Although they may not be able to pay the entire amount in full, you can at least agree to a structured repayment plan that works for both parties. Be polite and straightforward, keeping your emotions in check. Instead, choose a neutral setting and have a one-on-one conversation.
#Awkward conversations about money book online free how to
If you’ve already loaned money to someone you care about and aren’t sure how to ask for repayment, approach the topic carefully.Īvoid broaching the subject at gatherings with other friends or family members who aren’t involved, which can only make things uncomfortable for everyone in attendance. You don’t want your loved one to feel angry, guilty, or ashamed, which can make bringing up repayment difficult, especially if it becomes an emotionally charged conversation that leaves you both upset and unsatisfied. Emotions can take over and cloud your judgment, making you more likely to accept excuses and half-promises. If you can’t rely on the borrower to make payments, it becomes your responsibility to follow up and ask for the money back, which can be difficult without straining your relationship. They may prioritize an unnecessary purchase over paying you back, assuming you’ll understand.
Sometimes, borrowers feel less obligated to repay the loan promptly. The money isn’t coming from a financial institution, and there aren’t any immediate consequences for late payments, such as late fees, high interest charges, or a negative credit score. Repayment Isn’t Always a Priorityįriends and family members know you love them, so repayment isn’t typically a priority. Even better, create and sign a loan agreement to document the terms of the loan in writing. Communicate about repayment terms like due dates, amounts, and whether you will charge interest. If you choose to lend money to a loved one, outline your expectations before handing over any cash. Open-ended loans don’t outline the expectations or obligations of either the borrower or the lender, leaving you both to make your own assumptions about the loan and how to handle it in the future. That means neither party knows when payments are due, how much they should be, and whether the borrower must pay any interest. Unless you agree to a structured repayment plan, most personal loans between friends and family members are open-ended. For these reasons, sometimes, it’s best to say no. The consequences of a bad loan to a loved one range from difficult to dire.
Lending money to family and friends often comes with more problems than it solves, both for you and the person you loan money to. Why You Shouldn’t Offer Loans to Friends or Family Members You may even feel obligated to lend a financial hand to your loved ones simply because they’re important to you and you don’t want to see them struggle.īut lending money to loved ones comes with considerable risk - not just in terms of getting your money back, but also when it comes to the relationship you have with the person in question.Įnabling poor spending habits and causing awkward conversations are just two of the many reasons providing loans to loved ones is a bad idea. It can be hard to refuse to loan money to a close friend or family member.
0 kommentar(er)
