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Lending money to family and friends

Updated on April 2, 2015

I am always want to help people, especially my friend and family. Unfortunately, I do not think the way to help an over spender is to loan them money - you then enable them.

I wish I could lend every struggling person money, but my best thing to do would be to help them manage their finances - teach them how to get out of debt, how to set up a budget, what books to read.

In my opinion, that is more valuable that the actual dough you will lend.

When to lend money

I think that lending money to friends or family can be good if the situation makes sense, but the biggest problem that people have is that they eventually say, "I want all my money back", but don't setup or enforce a payback plan. Make sure you make a realistic plan for the person to pay back money to you. Otherwise, you may want to think about not lending the money out.

How to save your hard-earned money

Some adults fall unto hard times and have a lot of debt because they were not properly taught how to save as children and say "No" to their family and friends as adults. I want to teach you about handling, earning, and saving your own money.

Also, please refer to my other Hubs on saving money:

Pitfalls of lending money

  • You may not get paid back, and loose the relationship you had with that person.
  • You will feel stress and anxiety every time you talk to or see that person and wonder "when will I get my money back"?
  • You may actually need that money for a rainy day yourself, and will not have access to your money.
  • You come to realize that the person you lent your money to is still spending like crazy, and did not learn from your generous loan.


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Have you ever loaned money to a co-worker, friend, or family member?

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Example of a bad loan

Someone I knew was having a lot of trouble with his bills (let's say "Bob"). Bob asked his friend "Mark" to help out with a loan of about $3,000.00 for a few months. After 3 months, Bob repaid the $3,000.00 as well as some extra money as a thank you. Then Bob bought tickets to a baseball game for him and Mark and took a trip to see the game, all because Bob wanted to thank Mark for the loan. After spending tons of money on the game, food, hotel, tickets, gas, and so on, Bob was back in debt within a few months and was having trouble paying bills again.

Take aways ...

The point is, if someone borrows money, make sure the payback plan is realistic and that the person who borrowed the money doesn't go back into bad habits of wasting money, no matter how thankful they want to be.

Think about what is right for you, and think twice before lending out your hard earned money.

© Copyright 2015 - MarloByDesign.


© 2008 MarloByDesign


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    • MarloByDesign profile imageAUTHOR


      10 years ago from United States

      I am glad you had a positive experience - I have one positive one and one negative one, so I wrote from both perspectives. Thanks for commenting!

    • Sally's Trove profile image


      10 years ago from Southeastern Pennsylvania

      All have been good except for one. All have included a repayment plan, except for that same one. You are so right about the payback plan!

    • MarloByDesign profile imageAUTHOR


      10 years ago from United States

      Please leave your comments here about your bad (or good) experiences of lending money.


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