Lending Friends Money: Is it a good idea?
Lending friends money provokes a wide range of opinions from bank advertisements to famous money advisers. However, first assess the position of this friend in your super friend group before opening your wallet. Many people confuse good acquaintances or single function friends with close buddies, and that is when money lending can be disastrous.
As you’re the CEO of your own friend network, it’s time to figure out your company’s money lending policy: 1) When do I gift money and when do I lend money? 2) What are my financial deal breakers? 3) When do I say yes or no?
Lending Friends Money: In the bubble
Advisers have very clever advice on the matter… such as only give what you can afford and avoid co-authoring a loan (Lending Money to Family and Friends); if you lend money get a promissory note; (How to Lend Money to Friends); and, laws about loans (9 Tips for Lending Money to Family and Friends).
For up to 50 bucks this advice may be a bit extreme. These amounts usually go: “Hey, can you lend me a few bucks until payday? I’ll pay it back Friday.” However, if you’ve heard this five times before, and before too many Fridays, without repayment, you have the right to say, “Sure I’ll front you money, when you pay back the other amounts.” Or, ask them, as some money consultants suggest, “Sure, if you clean up my house in exchange for what you already owe me.” I say good luck getting any of my friends to scrub my bath tub for a couple of bucks.
Lending Friends Money: Outside the bubble
As we’re not generic lenders but real people, you’ll have to decide on your own network’s lending policy. In my own close friend hub, I loan money. I always have and always will. However, I’ve become smarter about lending friends money and my time (which I consider money). If the friend is part of my inner circle, I’ll offer a no obligation money loan in an amount I feel comfortable in sharing on my budget at that time. However, these friends are clearly in my core group.
I treat my extended friend network on a case-by-case basis as one solution doesn’t fit all people. But, for these folk I am happy to extend a line of credit, providing a “friend interconnectedness loan.” Many a business has been launched on borrowed money. Write down your deal breakers and the values you hold around money and write down friends who you would give a no obligation loan to and those you’d definitely want your money back. The clearer you are ahead of time, the better you will be to deal with money matters as they arise.
For lending friends money I suggest checking out an online company LendingKarma who sets up clear contractual agreements between your and your friends and family. A quick and easy way to get “it all down in writing,” rather than relying on each others memories.
I have a friend who has still got mixed about money she loaned her dear friend many years ago and has not yet been paid back. Does she really need that cash? Has it affected this relationship or her life negatively? Will this affect her relationship with her friend now? If all the answers are no, then forgeddabout it. Send that money off as an imaginary gift of love to those people and wish them much future prosperity.
Remember…. A great friend starts with you!
© Glenda Shaw / Superfriendgroups.com 2014
Please note: I hide specific and identifiable details in my friend stories as these stories are examples of behavior and not meant to hurt anyone. These stories are based on my opinion and perspective, except when the people written about are in the public domain. Any advice is from opinion and research and must not be viewed as legal or medical advice.