As always, the rule of thumb when it comes to friends and relatives borrowing money from you is to say no. You don’t want your relationship to turn sour later on when it comes time to ask them to repay what they owe. However, there are instances when it is just too difficult to say no especially if you really have something to offer. There are ways though for you to still lend them money without going through problems later on.
Just give them a certain amount
If for instance your friends would like to borrow $1,000 from you and promised to pay you by the end of the month, just give them a percentage of that amount instead. This is true especially if the money is for emergency purpose. Tell your friend that you will give 20% of that amount and there is no need to pay you back. By then, it will be taken as a form of assistance. Your friend will also feel bad borrowing money next time because he has just been given something for free.
Treat them like strangers
If you really have a lot of friends borrowing money, the best thing to do is to treat them as strangers. You let them borrow money but don’t give them special conditions. Tell them straight up that you also lend money to other people and that the same terms and conditions must apply. If other people borrowing money from you sign a contract, they also have to do the same thing. You need to be honest about it and not let them play with your emotions.
Lend money coming from your business
One of the reasons why it is too difficult to ask a friend or relative to repay you is because you give out your personal money. The best solution is to lend your business money instead. By then, he will be obliged to repay on time. Your friend must also understand that you are separate from your business. Therefore, there should be no special terms just for him because of your relationship.
Buy the items or pay the bills instead
You need to understand how the money will be used before allowing your friend to borrow from you. If the money is for paying hospital bills, tell your friend that you will direct the funds to the hospital instead of giving him cash. The same thing is true for other expenses. By then, your friend will not be tempted to use the money for other things. Take note that during times of crisis, people become irrational with their financial decisions. It helps if you can force your friend to use the money borrowed to where it is intended to be.
As much as possible, you have to say no to friends and relatives borrowing money from you. In the event that you can’t, you just have to follow these tips. For sure, your relationship won’t be strained later on.
Featured and 1st image courtesy of Ambro / freedigitalphotos.net
2nd image courtesy of Gualberto107 / freedigitalphotos.net