How To Navigate Finances With Friends
Money matters can be a touchy subject. When it comes to friends, things get more complicated. We most likely have all faced the dilemma of a friend or family member asking to borrow money. While we want to help them out, we hesitate.
So, what should we do in this situation?
Whatever the situation, financial conflicts with friends can be awkward and uncomfortable. One of the first steps to take to approach the situation is to be calm and rational. It is important not to get emotional and share your thoughts respectfully.
You can approach the situation with a light joke. It’s important to try and understand your friend’s perspective and why they may be having difficulty paying you back. Perhaps there are underlying issues that you might not be aware of, such as financial struggles or unexpected expenses.
The moment you have both expressed your thoughts and feelings about the situation, it’s time to work towards a solution. For example, you may consider working on a payment plan where your friend can pay the money in installments. If that is a reasonable option, you can also work on other compensations, such as exchanging services or goods.
It is important to set boundaries. Without them, some borrowers may feel like they have unlimited time to repay and use the money for other things.
To avoid resentment or loss of money when loaning to friends and family, consider these tips:
- Reframe the loan as a gift to ease the pressure, and only lend money you can afford to lose.
- Make a written agreement of the terms of the loan, and be specific about expectations and repayment.
- Do not be afraid to issue gentle reminders if the loan is not repaid on time.
Being clear and intentional with your loan can avoid stress and potential conflict with loved ones over money.