There’s an old joke that goes: If your brother-in-law borrows $100 and doesn’t talk to you again, was it worth it? The answer, of course, is the same as the joke about what it’s like to date older women: Depends.
Joking aside, lending money to, or borrowing from, family and friends is one way to make sure the relationship sours quickly because people who need to borrow money and cannot do so from a bank probably should not be borrowing at all, and you should not be lending to them.
There are some exceptions, but this article will help to explain alternatives to borrowing and lending while also exploring the train of thought one should take toward considering the options.
Why Does This Person Need Money?
When a person asks for money, it may be an urgent matter, such as his auto or life insurance will lapse, or his children have been eating Ramen soup for two days and he has been trying to find work because his hours were cut a few weeks before.
However, for a person who’s auto insurance is going to lapse because of skyrocketing premiums that are the result of multiple DUIs, it might be best to allow that person to use public transportation. For the family who needs groceries, it may be best to take them grocery shopping rather than give them cash, not only to ensure the money is spent on groceries, but also to have some quality time together, because it is likely that there is more going on than just being short on dough.
The answer of whether or not to help someone out, though, is easier to find when you think through this process and ask yourself, why me?
Why Did He You?
Naturally, we want to help those close to us, but many people have an inclination to do good deeds for those who are nothing more than acquaintances. After all, helping others feels good, and gives one a sense of importance. However, before giving it is crucial to know why this money is needed.
Not only does a person being asked for money have a right to know why the money is being asked for, but she also has a right to ask, why are you asking me? When there are relatives and closer friends who should be willing to help.
Has this person burned those bridges already and you are the next stop on the toll road of broken promises? Or are you just a very nice person who makes people feel comfortable asking for favors? Are you wealthy? If so, does this wealth and/or generosity make it okay for you to be targeted in this kind of situation?
It is best to have a close friend or loved one discuss this thought process out loud. It will shed light on how you feel and what you think. And if you do want to/can afford to give, what is appropriate?
How Much Can You Afford to Give?
Upon deciding that this person needs or deserves help, it is important not to put oneself at risk of being short of cash in order to help someone else. After all, would you advise someone to pass over buying his child shoes so that he can give a little more to someone else?
And if this is a loan that will carry interest and potentially make money, would you advise that same person to postpone buying shoes for his child to reap a potential 10% gain?
If a person needs $1,000 for a doctor’s bill, but you can only give $200, then it is okay to only give $200, just as it is okay to give nothing. And the keyword here is give, not loan. However, the best option available is to guide them through the process of acquiring the best personal loans from a reputable and understanding financial institutions like DrCredit. That ways you would have provided guidance and still able to maintain good relations.