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How to Borrow Money from Friends or Relatives (Without Ruining Your Relationships)

How to Borrow Money from Friends or Relatives (Without Ruining Your Relationships)

In the words of William Shakespeare, “Neither a borrower nor a lender be.” The problem with borrowing or lending money is that it poses a serious threat to your relationships. Borrowing money from family and or friends is especially risky because it puts you in an awkward situation and can easily taint a perfectly good relationship. For example, being in debt to your mother or best friend can lead to feelings of guilt and associated problems when you realize you can’t pay back your debt on time–or at all.

If you care about your relationships, you will try to avoid borrowing money completely. Even if you are able to pay back the money you owe in full and on time, it still can change the nature of your relationship forever. That being said, asking for money from someone you care about is often the surest refuge out of a difficult financial fix. If you must borrow money from family or friends, do it as the very last resort and only for temporary financial shortfalls.

Here are some basic guidelines to help you borrow money from friends or relatives safely without ruining your relationships:

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1. Be honest about your financial situation

Personal finance is a topic that most of us would rather not discuss. But, if you are asking for financial help, it is necessary to show some level of humility and a willingness to be honest about your financial condition. This is necessary because your lenders will want to know how you will use money they give you.

Don’t paint an eternally rosy picture of your financial condition when it is not all that rosy. Explain all the risks involved honestly so your friend fully understands what she is getting into from the outset. Being transparent will also create room for her to be honest too and give you genuine advice.

2. Borrow only for essential stuff

Never borrow money to obtain non-essential things like a new smartphone or to invest in volatile markets like the stocks. Borrowing money to obtain unnecessary stuff is not prudent at all. Your brother-in-law will also not be amused if you ask a significant sum from him and blow it all in a single event, such as a party.

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Ask for a loan from relatives to address real emergencies, such as hospitalizations. If you must borrow to invest, invest in solid things that appreciate steadily like an education or a house. Just be prudent about how you use your loan and make sure your friend or family member invests a comfortable amount, in case things go sour.

3. Put it on paper

Treat loans from family members and close friends just like you would treat any other loan. Put your loan on paper and document the loan terms, principal, interest rate, and repayment frequency. This helps to minimize risk of a misunderstanding in the future and ensures your friend is clear on when to expect repayments and when the loan should be fully settled.

Also, record any provisions for repayment extensions or reliefs in case you are unable to repay your loan as agreed upon. Of course, you can do away with this formality especially where the loan is only a small amount. But, it’s recommended you insist on documenting the loan just to be on the safe side.

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4. Pay up on time

This goes without saying. Once you agree on the loan repayment terms, be professional and stick to them. Pay your loan on time without making excuses. Remember that a personal relationship you turned into a business relationship is at stake here and not just another random relationship.

If your financial situation improves before the loan repayment period lapses, pay off the loan early. This will be a pleasant surprise to your friend or family member and may help you win back some of the “points” you lost by taking the loan in the first place.

5. Maintain communication

If you are struggling with your repayments, don’t run or start hiding from your lender. Hiding gives a bad impression that you don’t intend to repay the money you owe. Maintain communication throughout the life of the loan and be honest and sincere about your situation. Being honest might take away more “points” from you, but it at least allows you to keep some of your honor.

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Resist the urge to get agitated when your friend or relative starts to nag or hound you to pay up. Put yourself in his shoes and imagine how you would feel if you were the one on the other side. You would likely also remind him constantly to pay up. Take it in stride and pay some amount back even if it is only a fraction of what you owe to demonstrate sincerity and ease the tension.

6. Return the favor

Life has a way of turning things on their heads. In time, you may find the friend or relative who helped you out of your financial fix is in need of help themselves. Return the favor extended to you by offering yourself and your resources to help them out. Do this even if you repaid your debt with interest or had incidents when your relationship was strained by the loan. Showing this kindness to others is a mark of maturity and reflects well the favor paid to you—and it was a favor!

More by this author

David K. William

David is a publisher and entrepreneur who tries to help professionals grow their business and careers, and gives advice for entrepreneurs.

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Last Updated on December 3, 2019

10 Life Lessons You’d Better Learn Early on in Life

10 Life Lessons You’d Better Learn Early on in Life

There are so many lessons I wish I had learned while I was young enough to appreciate and apply them. The thing with wisdom, and often with life lessons in general, is that they’re learned in retrospect, long after we needed them. The good news is that other people can benefit from our experiences and the lessons we’ve learned.

Here’re 10 important life lessons you should learn early on:

1. Money Will Never Solve Your Real Problems

Money is a tool; a commodity that buys you necessities and some nice “wants,” but it is not the panacea to your problems.

There are a great many people who are living on very little, yet have wonderfully full and happy lives… and there are sadly a great many people are living on quite a lot, yet have terribly miserable lives.

Money can buy a nice home, a great car, fabulous shoes, even a bit of security and some creature comforts, but it cannot fix a broken relationship, or cure loneliness, and the “happiness” it brings is only fleeting and not the kind that really and truly matters. Happiness is not for sale. If you’re expecting the “stuff” you can buy to “make it better,” you will never be happy.

2. Pace Yourself

Often when we’re young, just beginning our adult journey we feel as though we have to do everything at once. We need to decide everything, plan out our lives, experience everything, get to the top, find true love, figure out our life’s purpose, and do it all at the same time.

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Slow down—don’t rush into things. Let your life unfold. Wait a bit to see where it takes you, and take time to weigh your options. Enjoy every bite of food, take time to look around you, let the other person finish their side of the conversation. Allow yourself time to think, to mull a bit.

Taking action is critical. Working towards your goals and making plans for the future is commendable and often very useful, but rushing full-speed ahead towards anything is a one-way ticket to burnout and a good way to miss your life as it passes you by.

3. You Can’t Please Everyone

“I don’t know the secret to success, but the secret to failure is trying to please everyone” – Bill Cosby.

You don’t need everyone to agree with you or even like you. It’s human nature to want to belong, to be liked, respected and valued, but not at the expense of your integrity and happiness. Other people cannot give you the validation you seek. That has to come from inside.

Speak up, stick to your guns, assert yourself when you need to, demand respect, stay true to your values.

4. Your Health Is Your Most Valuable Asset

Health is an invaluable treasure—always appreciate, nurture, and protect it. Good health is often wasted on the young before they have a chance to appreciate it for what it’s worth.

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We tend to take our good health for granted, because it’s just there. We don’t have to worry about it, so we don’t really pay attention to it… until we have to.

Heart disease, bone density, stroke, many cancers—the list of many largely preventable diseases is long, so take care of your health now, or you’ll regret it later on.

5. You Don’t Always Get What You Want

“Life is what happens while you’re busy making other plans.” – John Lennon

No matter how carefully you plan and how hard you work, sometimes things just don’t work out the way you want them to… and that’s okay.

We have all of these expectations; predetermined visions of what our “ideal” life will look like, but all too often, that’s not the reality of the life we end up with. Sometimes our dreams fail and sometimes we just change our minds mid-course. Sometimes we have to flop to find the right course and sometimes we just have to try a few things before we find the right direction.

6. It’s Not All About You

You are not the epicenter of the universe. It’s very difficult to view the world from a perspective outside of your own, since we are always so focused on what’s happening in our own lives. What do I have to do today? What will this mean for me, for my career, for my life? What do I want?

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It’s normal to be intensely aware of everything that’s going on in your own life, but you need to pay as much attention to what’s happening around you, and how things affect other people in the world as you do to your own life. It helps to keep things in perspective.

7. There’s No Shame in Not Knowing

No one has it all figured out. Nobody has all the answers. There’s no shame in saying “I don’t know.” Pretending to be perfect doesn’t make you perfect. It just makes you neurotic to keep up the pretense of manufactured perfection.

We have this idea that there is some kind of stigma or shame in admitting our limitations or uncertainly, but we can’t possibly know everything. We all make mistakes and mess up occasionally. We learn as we go, that’s life.

Besides—nobody likes a know-it-all. A little vulnerability makes you human and oh so much more relatable.

8. Love Is More Than a Feeling; It’s a Choice

That burst of initial exhilaration, pulse quickening love and passion does not last long. But that doesn’t mean long-lasting love is not possible.

Love is not just a feeling; it’s a choice that you make every day. We have to choose to let annoyances pass, to forgive, to be kind, to respect, to support, to be faithful.

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Relationships take work. Sometimes it’s easy and sometimes it’s incredibly hard. It is up to us to choose how we want to act, think and speak in a relationship.

9. Perspective Is a Beautiful Thing

Typically, when we’re worried or upset, it’s because we’ve lost perspective. Everything that is happening in our lives seems so big, so important, so do or die, but in the grand picture, this single hiccup often means next to nothing.

The fight we’re having, the job we didn’t get, the real or imagined slight, the unexpected need to shift course, the thing we wanted, but didn’t get. Most of it won’t matter 20, 30, 40 years from now. It’s hard to see long term when all you know is short term, but unless it’s life-threatening, let it go, and move on.

10. Don’t Take Anything for Granted

We often don’t appreciate what we have until it’s gone: that includes your health, your family and friends, your job, the money you have or think you will have tomorrow.

When you’re young, it seems that your parents will always be there, but they won’t. You think you have plenty of time to get back in touch with your old friends or spend time with new ones, but you don’t. You have the money to spend, or you think you’ll have it next month, but you might not.

Nothing in your life is not guaranteed to be there tomorrow, including those you love.

This is a hard life lesson to learn, but it may be the most important of all: Life can change in an instant. Make sure you appreciate what you have, while you still have it.

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Featured photo credit: Ben Eaton via unsplash.com

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