Should you lend money to a family member or friend?

Question Should you lend money to a family member or friend?

Answer No, give them the money.

Complete Answer  When you lend money to a family member or friend, you change the relationship with that person. You are now a lender and they become the debtor. Additionally, your and their values are involved, “What’s important to them may or may not be important to you” and vice versa. Remember that we tend to spend money on things that are important to us.

We all will, at some time in our lives, have a financial crisis and will need some help. When and if a family member or friend asks for help in the form of a loan, use this occasion to really help them. In education will call this a “teachable moment”.

Ask them “What happened?” Follow up their answer with “What will you change in the future so this does not happen again?” Then, if you can afford to, demonstrate the virtue of charity12 and give them the money they need with the condition that they will not ask you again.

Financial Literacy Knowledge/Skill

Be charitable for those in need.

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Next week’s topic: Do you need insurance?