Why You Ought to By no means Lend Cash to Household
Have you ever loaned money to a family member? If so, then rest assured that you are not the only person in such a situation.
In fact, many people helped their family members in the expectation that they would be repaid. The sad truth here is that you may never see the money you borrowed. What’s worse is that your relationship with that family member could be damaged.
Here are some common reasons why you should never loan family money.
It can hurt your finances
Your relationship with your family is never the only thing that suffers when you lend them money. Your balance and bank account can also be seriously affected.
As mentioned earlier, there is a great chance that you will never see that money again. Because of your close relationship, your family member might view the money as a gift rather than a loan.
Even if they know it is a loan, they may think that they don’t have to repay it, or at least they don’t have to repay it immediately. While this is not a problem with smaller loans, your future plans and savings could suffer if larger amounts are at stake.
It can create stress in relationships
Unfortunately, lending money to family can even damage or change your very special relationships with them.
Every time you loan money to a family member, the borrower may have less tendency to view the loan in a manner similar to that of loans from banks and other lenders. The two parties involved may have different expectations that may not end well for all involved.
Money can make relationships complicated and there are times when the damage can get too great. The strain in the relationship could even cut them off completely.
It can encourage bad financial habits
There are times when borrowing money for the family isn’t really the best help, especially when they are having trouble managing their finances. While it might offer a short term solution, this will never solve your long term problems.
Although you need to help them repair their roof, for example, and a loan may possibly do so, you want them to develop healthy and better money habits. Knowing how to manage their money will reduce the chances that credit will become their permanent fix while at the same time protecting your relationship with them.
Maybe you need the money too
If you have the money to loan to a family member, chances are you already want to use it for something. It could be part of your savings or your emergency fund. Always think about your own finances first before loaning money to someone, whether family member or not, especially if the money has already been earmarked for your personal needs and goals. For all you know, you may not really have the spare money to go through at all.