Simple and straightforward..."No, I don't lend money." Some people may be offended at this, but good friends should understand that you work hard for your money and have your own plans for it, and don't have to give out to people who need to work on their money management skills or their work ethic. That said, most good friends won't ask unless they really need it, and then it's often a different story. Lending money is the single best way to destroy friendships, too, because if someone hasn't managed well enough to have money today (your average "Can I borrow $20?" person) then they're going to be short of money tomorrow too.