To Lend or Not to Lend: Navigating Money Requests from Friends
Tulix Team
Every so often, a friend will ask you for money—for an emergency, a special occasion or just because they’re short on cash. It’s natural to want to help but before you agree to part with your hard-earned cash, consider what this means for your friendship moving forward.
Gichuki Kahome, a personal finance coach, shared an insightful tweet on lending money to friends.
The responses went a lot like this…
But there are a couple of tips in there like this…
And this…
From some of the tips shared in response, money requests from friends are not the easiest thing to handle. Here’s a general guide on how to confidently say no and how to safely say yes in order to prioritize your own financial well-being.
How to Say “No”
Let’s tackle the elephant in the room first. There’s a lot to consider when asked for money unexpectedly so firstly remember you don’t need to provide an immediate response—what is your current financial situation? What kind of relationship do you have with your friend? Do you immediately feel hesitant and what could be the reason? Take some time to think and give your friend an estimate of how long you need to make a decision.
If you’re not comfortable lending them the money, be honest from the start. While you don’t owe them a lengthy explanation you can say “I know this must be a tough time for you but I can’t afford it right now” or “I know it took a lot of courage to ask me for a loan but I don’t feel comfortable mixing friendship with money”.
Asking for money is hard and is often a last resort for many. But saying no to such a request doesn’t mean you can’t help in other ways. Perhaps you can support your friend differently by reviewing their resume and introducing them to your networks for better opportunities if they’re struggling to make ends meet. It’s also a great opportunity to advise them on how to manage their finances by showing them how budgeting can be more valuable than outright borrowing, which in the case of a repeat borrower is more often than not, a quick fix and not a long-term solution.
Saying no doesn’t make you a bad friend and it demonstrates healthy boundary-setting. A true friend will understand where you’re coming from but even if they don’t, try to empathize with them while sticking to your decision.
Going Through With Lending
Have some money to share? Great. Be very clear about the terms of the loan from the amount of money to a repayment plan that includes realistic dates depending on your friend’s financial situation. Remember to put yourself in their shoes when thinking about what’s reasonable.
Where relevant, put the terms in writing so that you both have a clear understanding of the agreement - it could be a simple email or WhatsApp message that you can both refer to. For some, anything semi-formal may create tension in the friendship so a ‘gentleman’s agreement’ may be enough when you really trust each other. Set up automatic calendar reminders where you’re both invited to make the repayment discussion even easier as there will be no need for one once the reminder pops up on your end and theirs.
Remember, You’re In Charge
Think of your approach to lending as part of your relationship with your money. Here are a few questions to help you prepare for the next time you’re faced with such a situation:
- Is there a specific situation where you would feel comfortable asking friends for money?
- When a friend asks you for a loan are there any specific factors that you consider before making a decision?
- How do you feel about lending money to a friend who has a history of not paying back debts?
- Do you feel like loans between friends should be a more formal agreement or do you prefer to keep it more casual?
- How would you handle a situation where you or your friend is unable to settle the loan?
Helping friends while protecting your wallet is a tough balance to strike. On the one hand, it could strengthen your friendship but it could also lead to awkward conversations and resentment if the loan is not repaid on time or ever.
From Gichuki’s tweet earlier, a general rule of thumb is to lend money that you’re okay with not getting back. But even for this amount, budget first & know where it’s coming from so that it’s easier on you whichever way things turn out.