Helpful tips when lending money to loved ones

Economic times are tough and these days it is nothing new for friends or family to help a loved one, who is in a serious money bind. But for some it is a difficult and uncomfortable subject and can make things awkward. Zeeva therefore shares some handy tips when you intend to lend money to a relative or close friend: 

- Trust your instincts. If you know the person has a debt record, you know it is not a good idea to loan him/her money. Or if you have already loaned money to someone before and they always make excuses instead of repaying you, why do you want put yourself through that strain and burden?

- Think with your head and not your heart. When it comes to your own money, see it as business and nothing personal.

- Manage expectations right from the start and put it in writing. Expectations may differ from person to person but try clearing the term of the loan and the interest rate out together. A full contract will also avoid unnecessary confrontation and arguments in the future.

- Never ever sign surety for a loved one or anyone for that matter. Politely decline.

- Only lend what you can afford. You can’t help someone if you get yourself into serious debt because of your nice gesture.

- Consider the impact it can have. If it is a family member perhaps, what if other family members hear about it, and also start asking for money? Just think about the consequences and do not let your loved ones take advantage of your generosity.

If you are in the position to lend money to your loved ones, it is indeed a privilege, but it should not be a burden. Take the above tips into account and protect yourself when it comes to your own pocket and money. 

One final tip to leave you with – if the cash that a loved one wants to borrow is a few hundred rand and you can afford it, rather give it to him/her. Leave it there and write it off. Fighting about a small amount of money is not worth losing the ones you love.