Home   >  

Lending Money To Family Members 101

By on January 24, 2019
Lending Money To Family Members 101 #rsfmag #ranchosantafemagazine #ranchosantafe

According to www.forbes.com, 63% of the Americans do not have enough money for taking care of a $500 sudden emergency.  Mixing your money and your family can become tricky very quickly. The reality is that most of the times people go through a tough financial situation, whether they are starting on their own, lost a particular job or had to spend a lot of money due to some important emergency. It is true that your family members will not be your first priority when you are asking for financial help. There are certain pros and cons that are associated with allowing the family members to ask for financial help. Given below is a list of the pros and cons that you have to consider.

Pro 1: Teaching fiscal responsibility

If your family members find themselves in a situation in which they require money, and this has happened as a result of poor saving skills or the bad spending habits, it is your turn to teach them a lesson. It is your duty as a family member to teach them to become more responsible about the spending habits as well as how to save money. You have the option of setting boundaries along the total money that you are lending.

You can set a particular date within which he has to give back the money and you can also charge a rate of interest. This is most effective when you are lending money to young adults or teenagers. This is an ideal way of teaching them how they should manage all their money without causing any harm to the credit rating.

Pro 2: You can need help as well

It is obvious that you should not lend money with the intention of being capable of borrowing money from them. However, you never know when an emergency situation arises and you might require extra money to meet that particular situation. If you have already helped anyone of your family member in the past, you can easily approach them for receiving help. Since you have stood like a strong pillar during your family member’s bad time, you can be assured that he is going to do the same for you as well. However, you have to ensure that you are not taking advantage of this situation.

Pro 3: Helping a person you love

Sometimes, most of the family members require help. They can borrow money despite the fact that they do not have any fault. Helping these family members out can make you feel good as you are lending the money for a good cause. Not a single person will want to see the family members suffer and even if you are not capable of helping them, it is going to provide an empowering feeling of providing them with all the assistance that they are going to require during the time of despair.

However, ensure that you are not letting people take advantage of you and in case if you are interested in helping them, it is best to remain careful despite the fact that you love them. If you want a personal loan, you can also visit https://www.libertylending.com/.

Con 1: Becoming the family Bank

If you are the kind of person who is helping almost everyone during the situations of financial stress, it is obvious that each and every family member will consider you to be the bank of the entire family. In case if any family member goes through financial troubles and you are used to lending money to everyone, that particular family member will know who they should approach.

In fact, your family members can also use your generosity for their own benefits. This is responsible for leading to being asked to lend more money to almost all the family members who are in trouble. This is why it is your duty to ensure that you take care of the lending habits so that people do not consider you to be the family bank.

Con 2: Resentment

If you are lending money to any particular member of your family and they are not adhering by the deadline that you have provided, it is obvious that it is going to create resentment as well as tension. Most of the people who borrow money from their family members tend to believe that despite a written agreement, they can delay paying back the loan. They do not understand that you can also have emergencies and you are going to require the money back. This is responsible for numerous uncomfortable family holidays or get together.

There is also a chance that if you are lending money to a particular family member and you refused to lend to another family member, resentment is going to stem from this situation as well. It is crucial to understand whether the person to whom you are not lending the money, is mature enough and will be responsible to not be jealous of you lending money to the other member.

Con 3: Overextending the finances

It is true that we will definitely love to help people whom we care for. However, you cannot ignore your own financial situation as well. It is true that you will not want to see your loved ones going through any kind of a financial hassle but chances are that you do not have enough money for helping them out. If you are not paying your bills or extending the credit for helping your family member, this is probably the worst decisions that you are taking.

It is obvious that you will not want to go through the same situation that your family member is going through. If you are not capable of lending money at any point in time, you have to communicate with the family member and explain as to why you will not be able to lend the money.

Conclusion

When you are permitting your family members to ask for money from you, certain important considerations need to be taken care of. It is true that your intentions are definitely going to be the best, but chances are that the things are not really going to be as great. You need to be extremely careful when you are lending money and also make sure that you are getting the money back within a proper time.

About Jacqueline Maddison

Jacqueline Maddison is the Founder and Editor-in-Chief of Rancho Santa Fe Magazine. She believes in shining light on the best of the best in life. She welcomes you into the world of the ultimate luxury lifestyle.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.