When you have a decent amount of money, it can be a sense of security for you. And for those who have proven themselves to be generous with their money, your financial security can also be a sense of security for your family members who might feel that they can ask you if times get tight for them. And while you might have the ability to help at times, these conversations and situations are often uncomfortable for both parties. Luckily, there are things you can do to prepare yourself for these types of conversations and requests.
To help you see just what these things are, here are three things to do when a family member asks you for a loan.
Ask For Time To Think About It
When a family member approaches you about giving them a loan, one of the first things that you should say is that you need some time to think about it.
By asking for some time to process what they’re asking, you can try to take some of the emotion out of the situation both for yourself and for them. And, if you have someone else that you need to bring into this discussion, like your spouse or someone else, you can have the ability to do this without putting you both on the spot so much. After you’ve had time to think, make sure you get back to them, even if your answer is that you can’t give them a loan at this time.
Consider How This Will Impact Your Financially
As you take some time to consider the request for a loan, one of the things that you should think about is how the decision to loan them the money could impact you financially.
Even if you have enough money at the present moment, you should think about future scenarios and how you’d be able to handle them financially if you were to loan the money your family member is asking for. If you lose your job, do you have enough savings to cover your expenses until you find something new? Will you be able to continue contributing to your retirement funds or putting money away for potential medical or assisted living expenses in the future? All of these things should be considered before giving a loan.
Put Everything In Writing
If you do decide that you can loan your family member money and you choose to give it as a loan that will be repaid, you should be sure that you talk through all of the details together and get everything in writing. This way, expectations will be clear on both sides and you can hopefully spare your relationship from any turmoil.
If you think that there’s a possibility that a family member or friend could ask you for a loan in the future, consider using the tips mentioned above to help you prepare for these types of conversations.