Some of us might have experienced family or friends asking to borrow some cash when they see we are “more well off”. While I have nothing against helping out, lending money could be a source of stress and tension on relationships. That’s because I have seen and heard of people having their goodwill taken advantage of; and the borrower makes it hard by not paying back. Fortunately, I never experienced this thanks to my stingy nature and hopefully, never will.
Honestly, you can do much better things with your money like investing it and letting it grow than throw it to people around you. There are exceptions though! Sometimes a family member needs urgent assistance or you could be asked to invest in someone’s business. And during those times we would usually look the other way when it comes to repayment. Well, except for business; we want that ROI!
Tips for lending money
For a lot of people, money is strangely a taboo topic. Why should it be so hard to talk about money? If just talking about it is so tough, imagine chasing people to get your money back! Not a fun time, I can assure you.
Best tip from me? Don’t lend people money. Cut the problem where it stands and everything should be alright, right? One behaviour I’ve observed from a “lend-ee” is that lending money is not going to be one-off. Sooner or later they (or someone else) will come to you for more.
2. Consider it a donation
If you absolutely have to hand over your hard-earned cash to a friend or family member, assume it’s charity. Yes, I mean write it all off. Don’t expect it to be returned and if they do pay you back, consider it a bonus. This mentality will cut out the anxiety that comes from wanting your money back and not being able to get it.
3. Urgency and need
If someone needs money for an urgent medical treatment, I’m sure many of us would be compelled to assist. But always do your “background checks” because there are people who simply borrow to pay off other debts or worse, to spend of lavish lifestyles!
Yes, there’s really no simpler way around this issue. Many people will have expectations of you but you have to remember that you make the final call. The ball is in your hands but are you going to shoot or pass? If people see you has having excess money to burn, they’re more likely to come ask for a personal loan. But wait! There is a way to come out on top here.
How to protect yourself from lending money? Remove all cash on hand!
I don’t mean it as “burn your money on junk” here. What’s the best way to reject people who often ask for lanja (basically means “free meal”)? “Sorry, habis (finish) budget.” But if you’re well off, can your budget be effectively finished? Of course! Like all finite resources, money can be spent in a blink of an eye. And what better way to “spend” it than some internal accounting and allocation?
Allocate all your money to a purpose
You can and should:
- have a budget,
- set up an emergency fund,
- invest in a portfolio,
- manage risk through insurance,
- save up for a long term goal,
- plan for your retirement.
Any combination of these will practically guarantee you tie up your money and leave none to be lended. At that point, you just have to practice saying “Sorry, habis budget.”
Lending money to others is pretty simple; just hand over the money and they’ll pay you back, right? The hard part is coming to them like a debt collector and asking for it back when they don’t repay! Unfortunately, many people who have wonky moral compasses will not honour the loan. This forces the lender to absorb the loss and leaves relationships worse for wear. One method makes it easier to reject people who asks for loans is to effectively “spend” it on yourself first!
What’s the best way to lend money to friends?
– The Savey Fox