lending1.jpg“If there’s anything I can do, just let me know.”

Admit it. You’ve said that at least once to someone going through a rough time–we all have. Matter of fact, it’s much more than a well-worn, well-meaning phrase that we instinctively say before hanging up the phone, anxious to our friendship duty. Do we ever question if we’re doing the routine rounds or do we feel a pull in our heart?

Let’s face it–how many of us, while in the midst of a crisis, can really get it together to tell exactly what we need? Unless of course it is an injection of a dose of money. So that brings us to the million dollar question–How do you deal with friends who need Financial help?

This could be a delicate situation that can perhaps degenerate itself into a difficult situation, as compared to your own financial status at that moment. If you’d like to help a friend who’s in a financial mess, just keep in the back of your mind that “Money really is power.” And it’s your responsibility to be sensitive to that.

Should you lend money to your friends? Shakespeare said, “Lend money to a friend and you lose both, money and friend.” My dad educated me a bit on this; his advice was that if at all you must help a friend financially, never lend more than you can afford to lose. That’s also my advice for people who are out to make a killing in the stock market–never invest more than you can afford to lose. And that’s what they call the “risk capital.” How much risk capital do you have after all your savings for the rainy day?

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If you’ve loaned people money before and you had a bad experience, tell the person who wants to borrow what happened. Explain that it’s not a matter of trusting that you’ll be paid back. It’s just that you’re not interested in a business arrangement that could cloud an otherwise solid relationship.

If however you do offer to lend money to a friend you could follow these steps: Make a written contract. Make it clear when it is to be paid back and of course make sure you feel happy with the situation.

These steps may sound brutal, but in the long run, they will prove beneficial to yourself, your money, your friend’s money and your the friendship. These are hard facts and unwritten rules of friendship. You can only pretend to ignore them; but, if you want to keep your money AND keep your friend, these rules are the unwritten gospels of truth.

At times you may be able to get out of a situation by offering advice. Ask yourself if you’re sincere and genuine in giving advice to your friend on how he or she could come out of their financial mess. Put yourself in your friend’s shoes. It’s well known that a lot of people get into financial difficulties due to sheer lack of finance management. And some of the direct results of this are insecurity, fear, anger and depression. These feelings of anxiety and confusion can also cause one to make poor money management decisions. These poor decisions can lead to heavy debt loads, and start a vicious cycle of fear, anxiety, and panic that never seem to end.

Set your priorities first. Is the well-being of you, and your family has to be your priority during times of financial stress? Did you notice how “well-being of you” came first in the last sentence, and not “your family?” The reason for that is simple–if you take care of you first, then you are indeed taking care of your family. In financially stressful times, if you, as the head of the family, can’t cope, can you expect your children to cope? Now, or in the future?

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