Did you ever lend money to a family member before? If yes, then, rest assured that you are not the only person in such a situation.
In fact, many people helped their family members expecting that they will get paid back. The sad truth here is that you might no longer be able to see that lent money ever again. What is even worse is that your relationship with that family member might be damaged.
Here are some common reasons why you should never lend money to family.
It Can Hurt Your Finances
Your relationship with your family is never the only thing that suffers when you lend them money. Your credit and bank account can also take a serious hit.
As mentioned earlier, there is a big chance that you won’t see that money ever again. Due to your close relationship, your family member might think of the money not as a loan but as a gift.
Even when they are aware that it is a loan, they might think that there is no need for them to repay it or at least not right away. Although it might not be an issue with smaller loans, your future plans and savings might suffer if larger amounts are at stake.
It Can Cause a Strain in Relationships
Unfortunately, lending money to family may damage or change even your most special relationships with them.
Every time you lend money to a family member, the borrower might have a lesser tendency to consider the loan similar to how they consider loans from banks and other lenders. The two parties involved might have different expectations that might not end well for everyone concerned.
Money can make relationships complicated and there are instances when the damages can become too much to handle. The strain in the relationship might even sever it completely.
It May Encourage Bad Financial Habits
There are times when lending money to family is not really the best help you can give them, especially if they have a hard time managing their finances. While it might provide a short-term fix, this will never solve their long-term issues.
Although you need to lend them a hand in repair their roof, for example, and a loan might be able to do that, you would want them to hone healthy and better money habits. When they know how to manage their money, it reduces the chances of borrowing become their permanent solution while protecting your relationship with them as well.
You May Also Need the Money
If you got the money to lend to a family member, there is a chance that you already planned to use it for something. It might be part of your savings or emergency fund. Always think of your own finances first before you lend to anyone, family member or not, especially if the money is already allotted for your personal needs and goals. For all you know, you might not really have the spare cash to end in the first place.