Is Lending Money To Friends Ever A Good Idea?

Friendship means different things to different people.  We all do everything we can to help out our friends, right?  Of course we do.  But money is still a difficult subject among friends, and when one person is in need of some cash… and the other friend has it… what happens then?

Some people believe that you should never lend any money to friends, no matter how much you might think of them and how close you might be.  But things aren’t always so black and white.  Perhaps it would be better to say that where your currency is concerned, you can lend it to whoever you like - provided that a simple set of rules are laid down first.

The big problem with lending money to friends is that you can never be sure you can get it back.  That’s not to say that all friends wouldn’t do it of course - it simply means that whenever you lend money to someone you can’t be sure if or when you will have it returned to you.

And if you value your friendship with that person, you won’t want to jeopardize it in any way. 

The main thing to think about is that if your friend values your friendship as much in return, they won’t normally ask for a loan in the first place - at least not without instigating ground rules first.

And this is the main point to remember if ever you think about lending money to someone you know.  You should both be happy enough to sit down together and figure out how the money will be repaid - and when.  If you can do this then it is the sign of a strong enough friendship to survive the event… and if you can’t, then this clearly isn’t someone you should be lending money to in the first place.

This article on the Real Simple website - warns against the problems that sometimes come with lending money out in this way.  If you are seriously considering doing it, make sure you read this cautionary advice first.

Most of the time, money lent between friends is done so without any form of interest being attached to it.  This is fair enough since you are a friend and you won’t want to make any money off of the deal.  But you should make sure that a specific sum is agreed on in advance to be paid off either weekly or monthly.  Ideally this will tie in with when the person is paid, so that it is regular and expected.

If you go online and look for information on the subject of lending money to people you know, you will soon see that many people have tried it before and not had their money back.  Although it should be said that some of these experiences have a big truth written all over them - the ‘friend’ who asks for money but doesn’t repay it is not really the kind of friend you want to keep. 

Most people will repay what they owe without even being asked, but some will ask for money and it seems they never have any intention of paying it back.  This is why many people point to the wisdom in having the agreement of the loan in writing.  You might even want to set up a direct debit from their account into yours on the same day they get paid each month; that way you know you will receive a set amount on a set day.  Unless they go to the trouble of cancelling the direct debit - which would point to problems anyway - you know you will get your money.

In actual fact many strong friendships exist where neither party would lend money to the other.  Does this mean the friendship isn’t as strong anyway?  Not at all - it simply means that neither party is willing to jeopardize their relationship for the subject of money.

In the end different people will do different things.  And there will always be the tales of those friendships which buckled under the weight of the debt that is held between them.  You might question how strong those friendships are in the first place, but the main thing to think about is how strong yours are - especially if you are considering lending money to a friend.