Guidelines on Letting Your Friends or Family Borrow Money

In the world of addiction and recovery, lending and borrowing money might come up a lot. In fact, it might be what saves a loved one from going homeless or it might be the very resource that a person needs to get addiction treatment. At the same time, money can get in the way of relationships and friendships. Money is such a charged issue that it can be feel like taboo to discuss in some families or social settings. This article is for friends, family members, and loved ones. 

When you are approached by a friend or family member who needs money, you might feel the challenge of making that decision. When a friend or loved one comes to you to borrow money for treatment, paying the rent, or another reason, you might feel the pull to want to help that person out. You love and care about them - of course, you want to assist them. At the same time, you might have concerns. You might wonder whether you're ever going to get the money back. The following provides a guideline to facilitate making that difficult decision. It is an adaptation of an article written by Suze Orman, the famous financial advisor. 

Ask yourself whether the money is really going to help them out. If your loved one is borrowing money because he or she is going to get addiction treatment or needs money to reside at a sober living home, then your loan may be greatly benefitting them. In this case, your money is being used for a step in the right direction. However, if you are lending money because your loved one has always made poor money choices and now cannot afford a large bill, your money might not really make a big impact in your loved one's life. Until your loved one learns to make better choices when it comes to money, then it might not be a good idea to lend them money - unless they are preparing to turn their life around. 

Ask yourself if you can afford to help out. You might want to lend your loved one the money regardless of the circumstances. However, if you cannot afford to, then it's best not to borrow money in order to lend it out. Essentially, you'd be putting yourself at financial risk on behalf of someone else, who may or may not have financial stability. 

Ask yourself if you're willing to let the loan be a gift. If you're willing to say good bye to the money you lend your friend without expectations of getting it back, then that might be a good sign that you're okay with the transaction. Also, because money very easily gets in the way of friendships and relationships, without expecting the money back you take some of the emotional weight off the loan. 

These are some questions for loved ones to consider before lending out money to help out a friend or relative. It's a tough decision to make. Perhaps the above suggestions can ease the process.