It’s happened to all of us: someone close to us has experienced ongoing financial issues. We feel for them, and truly want to be of service during this difficult time. But should we actually loan them money?
Ask yourself the following:
A) If they were to never repay you, could you afford to lose the money? If the answer is no, do NOT loan them anything. You simply cannot risk your financial future. If you can afford to take the loss, read on…
B) Will this loan be to someone going through a temporary bind, or is it a drop in a bucket of a larger issue? If the latter, should you decide to help know that this will likely be one of many times they will lean on you. If you’re honest with yourself, you can tell the difference between temporary or ongoing.
C) If you can’t or prefer not to loan them money but would like to help, there are other ways to lift some of their financial burden. Consider cooking a few meals for them, driving them to work (or job interviews), babysitting the kids while they’re at work, or even having them live with you for a few months. These and other gifts take your time (and possibly patience) but could significantly cut your loved ones expenses and stress.
Finally, if you can afford to and feel they’re truly deserving, consider making your loan a gift, and ask that they pay it forward to someone else in need. Paying it forward is the absolute best return on investment.
And so it is.