Should you Lend Money to your Friends?

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?


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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11 Responses

  1. Here’s where I’m in danger of sounding like a total hypocrite — I owe some money to a friend of mine!

    But, if I can, I offer advice and try to skip the cash thing, largely because I’m often too skint to give any money in the first place.

    The problem with friends is that we / they think that they / we won’t mind another week / month / year before pay day.

    OK, with that character suicide out of the way, I’ll get my coat and leave…

  2. 18 years back, I lent a friend $1200. I only asked him to pay back when I need the money for my dad’s funeral expenses some 4 years later. I got back $900. I never got back the balance and I didn’t know where this friend is now. Since then, I decided that I will lend money to friends on 2 conditions. Either we have a formal black & white understand or I don’t expect it back at all.

  3. Robin Bal says:

    Hi Wayne,

    Most of us sometimes fall into a situation where we have to borrow money, if you cant pay back on time, just call the person and explain the situation rather than shying away.

    Take care and cheers.

  4. Robin Bal says:

    Hi Viv,

    You made the mistake of giving that person a choice to pay back whenever you need it. It should have been in black and white and a deadline assigned.

    Take care and cheers.

  5. Some years ago I was blindsided with a crisis in which I had to borrow a large sum of money from several people. Five years later, I can say they were all paid off on a monthly basis within two years. And it wasn’t like I made a lot of money, it’s a matter of priority. I felt that those people were kind enough to help me in time of crisis, it was the least I could do to pay it back promptly.

    I agree with your points, circumstances can sometimes get away from you and the best of intentions end up costing friendships. Black & White agreements are the way to go. My personal policy is that I never lend, I give this way it’s never something I have to worry over because the money is already gone as far as I’m concerned.

  6. jason says:

    Never lend money! If you can not afford to give it as a gift then you can not afford to lend it. Besides there is a reason they can not go to a bank and borrow the money. THEY DO NOT PAY THEIR BILLS! What they need is financial counciling and usually some goals and determination, also a second job.

  7. Debra says:

    I once got a lump sum of money and accidentally my two friends were with me when I found out. I bought for these two ladies and loaned them, limiting myself to $25 cash for each because I don’t often come across money, but these two girls decided to justify there not talking to me and now they are friends and I am hurt when I see them because I didn’t deserve this. I helped both of them out. They are both on strong medicines; one is on schitzophrenia medication and the other one takes the same meds for her back pain. The one taking the schitz meds was suspicious of the other one and I felt I had to explain this to the one with back complications so they wouldn’t have a blow out. I used the fact also that (and I probably shouldn’t have)she almost called 911 on the one with the back problem ( had to tell her that it could lead to cps getting involved and I didn’t want to see her lose her little boy) and I explained that she meant well though. I didn’t want to see the schitzo lady lose yet another friend and the one with the back problem told her this. “not good!” Neither one of them are talking to me today; yet they both owe me money. I gave and loaned the lady with the back problem a lot of things, including money, plus gave her a lot. They are both friends today and I am the outcast among them and I wrote a letter apologizing to the schitzo woman and she still has not forgiven me even though I had forgiven her many many times when she disprespected me by accusing me of taking from her when I am the last person to do this. I forgave her because of her condition. I feel bad that neither one of them talks to me. I should have just let them have it out over the medicine fight. The one with the back complications went to the one that was schitzophrenic and told her what I said even though I asked her not to say anything. The one with the back problem also said that someone had told her that I wanted to call cps on her; totally untrue. I think she is with the schitzo friend because she fears she will eventually call cps on her, so she stay friends with her out of this fear! She even acted like I was in on it. Why on earth would I do something like this; I am a parent’s advocate that hates cps. I told her that I was totally the opposite of this kind of thing. Here I sit after I gave them both so—-much and now the

  8. naysh says:

    the general consensus is never ever lend money to anyone who you can’t sue.

  9. Jenny says:

    “You risk the relationship by saying no,
    but you are taking a big risk by saying yes…
    which’ ll you choose?”
    If you loan a friend 30 bucks and never see them again, it was worth it)))they were not friends at all. I lend money, and do it practically every day, and i know that half of the whole sum won’t come back, I even don’t wait… I lend in case I don’t expect drawbacks or I’m sure in people whom I lend. I’m sure in that fact that all good things done turn back but not always from the exact side which you are waiting from. Have you ever seen the film “In return” if i’m not mistaken if yes you’ll understand if no watch it, it’s worth seeing.
    I know that now it’s not the best period to lend money, I have several friends that use special organizations to document the loan, and the both sides are happy and sure they found the best way out. Money shouldn’t influence our spiritual life and our relationships, especially in families!!!!I didn’t have a chance to use those organizations(my mom did), but I will, I’m sure I will, not even to bother about such things as money. Our health is more important))) Be sure you do the way your heart tells you) Good luck)

  10. Bianca says:

    My boyfriend may have to leave the country because I would not lend him $1600 with 3 days notice for a visa application. I did not have the cash and would have had to put it on my credit card. He still owed me $600 for a loan i gave him 8 months ago and did not see the money again. Somehow he has managed to make it all my fault and I can’t help but wonder if I did the right thing or not.

  1. April 21, 2009

    Should you Lend Money to your Friends?…

    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 befor…

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