If a friend comes to you for help, lending money seems like a sensible option at first. That’s especially true if it’s someone very close to you who you think would never let you down. But, even though there are some upsides to lending money, it’s hard to justify the risks. Here are ten things that will happen when you lend money to friends.
1 – Especially at first, your friend will be grateful to you for lending the money to them. It can seem to make your relationship stronger.
2 – A selfless act like lending money to your friend is sure to make you feel good about yourself.
3 – However, you don’t earn any interest on the loan, whereas at a bank, you accrue interest on your money.
4 – You might want the money to buy something.
5 – You might need the money. Fortunes can turn very easily. Yours might if something unexpected happens like a medical issue or the loss of a job. At that point, you might really need the money you loaned your friend in order to support yourself and your family.
6 – The due date tends to shift. Your friend will feel less pressured to pay you back because of your prior relationship. They feel like they’re waiting to do it when it’s convenient for them. Heads up: it will never be convenient for them to return a significant sum of money.
7 – A lot of the time, lending money just encourages people to rely more on others than they did before. Because it is very easy to becoming dependent on others instead of shouldering all the burden yourself. If your friend does fall into this all-too-easy bad habit, they might even ask you for another loan. If you don’t grant it, they’ll move on to others who might.
8 – It’s a hard subject to bring up. That money might create a wedge between the two of you.
9 – It can ruin your relationship. If your friend can’t pay you back or, especially, if they won’t pay you back, you’ll start to resent them.
10 – You can help your friend in other ways. Lending money isn’t the only way to solve someone’s problem. In fact, throwing money at a problem can oftentimes (though not always) be the most shallow way to take care of it. To pull out an oft-quoted metaphor, don’t give your friend a fish. Teach them how to fish for themselves. With your professional and personal help they might be able to benefit in ways like landing a better job or developing healthier spending and saving habits. There are definitely some dire situations when lending money to friends is the best choice, but if lending money can be avoided, you should steer clear.
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