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These 10 Things Will Happen After You Lend Money To Friends

These 10 Things Will Happen After You Lend Money To Friends

If a friend comes to you for help, lending money seems like a sensible option at first. That’s especially true if it’s someone very close to you who you think would never let you down. But, even though there are some upsides to lending money, it’s hard to justify the risks. Here are ten things that will happen when you lend money to friends.

1. Your friend will appreciate you.

It’s always nice to feel appreciated and, especially at first, your friend will be grateful to you for lending the money to them. It gets trickier when it’s time for them to pay you back, but at first it can make your relationship stronger.

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2. You’ll feel good about yourself.

A selfless act like lending money to your friend is sure to give you some warm fuzzy feelings. It’s nice to be able to help out someone close to you, and the satisfaction of doing a good deed is often worth the sacrifice.

3. You don’t earn any interest on the loan.

Let’s consider reasons why lending money might not be good idea. One less-than-selfless reason is that whereas at a bank you accrue interest on your money, when lending money to a friend the value of it decreases over time due to inflation. That means even when you’re paid back in full you’re still in the red.

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4. You might want the money.

We all want nice things. Chances are, you’ll be able to buy less nice things after lending money to a friend. This is less than ideal, though hardly enough of a reason not to be lending money to someone. The reasons that follow, though, will make a much more convincing case.

5. You might need the money.

Fortunes can turn very easily. Yours might if something unexpected happens like a medical issue or the loss of a job. At that point, you might really need the money you loaned your friend in order to support yourself and your family. But, even if your friend is now in a better place financially than you are at that moment, there’s no guarantee that you’ll be you’ll get your money back when you need it.

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6. The due date tends to shift.

This is if you have a due date at all. If you ignore this advice and lend money, at least set a due date. But even if you do, the problem remains that your friend will feel less pressured to pay you back because of your prior relationship. That’s natural; your friend might not realize how big of a deal returning the money is to you. They feel like they’re waiting to do it when it’s convenient for them. Heads up: it will never be convenient for them to return a significant sum of money.

7. Your friend is more likely to ask for a loan again, or a loan from others.

A lot of the time lending money just encourages people to rely more on others than they did before. That’s not their fault; it’s very easy to becoming dependent on others instead of shouldering all the burden yourself. If your friend does fall into this all-too-easy bad habit, they might even ask you for another loan. If you don’t grant it, they’ll move on to others who might.

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8. It’s a hard subject to bring up.

It’s uncomfortable enough for a creditor to call someone up and request payments, it’s another thing entirely to broach the subject if someone close to you isn’t showing any inclination that they’re going to pay you back anytime soon. That money might create a wedge between the two of you. That’s why lending money leads to further problems than just a hit to your checking account.

9. It can ruin your relationship.

This is one of the most significant risks of lending money to friends. If your friend can’t pay you back or, especially, if they won’t pay you back, you’ll start to resent them. Even if you don’t think you will, you will. That resentfulness isn’t worth it when there are likely other ways you can have their back.

10. You can help your friend in other ways.

Lending money isn’t the only way to solve someone’s problem. In fact, throwing money at a problem can oftentimes (though not always) be the most shallow way to take care of it. To pull out an oft-quoted metaphor, don’t give your friend a fish. Teach them how to fish for themselves. With your professional and personal help they might be able to benefit in ways like landing a better job or developing healthier spending and saving habits. There are definitely some dire situations when lending money to friends is the best choice (such as if you’re in debt to a loan shark), but if lending money can be avoided, you should steer clear.

Featured photo credit: Money Wallet/401(K) 2012 via flickr.com

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Matt OKeefe

Freelance Writer, Marketer

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

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