We love our friends and family very much and can do anything for them. Most of us lend money to our friends and family members without any inhibitions. But though it is considered to be a goodwill gesture, it might play havoc on your personal finances if they don't return the money.
Here are few ways by which you can deal this issue and also keep your relationship with your friends and family members on track:
Give the money as gift and consider repayment as bonus:
If you lend a certain amount of money to your friend or any of your family members, consider that money to be a gift to them from the start. You will have to understand it from the beginning that you won't get back the money. In such a situation, you won't face any financial consequences when the person defaults the loan. Moreover, not making payments won't interfere with your relationship as love is more important than money.
Consider lending money as a business transaction:
Be business-like if you don't want to consider lending money as a gift. Follow the terms and conditions that your bank will follow while lending you the money. In order to make sure that you get paid, you should keep everything in writing. This will make your friend and family members understand that you're expecting to get back the money.
Prioritize your personal finances:
You should give importance to your personal finances more than anything else. This will help you deal with the sudden emergency situations and financial crisis in a better way and people won't take you for granted while asking for money. You will have to know where you want to draw the lines so that you will be able to manage your finances well.
Avoid lending money to habitual borrowers:
Needing money to cover an emergency is one thing but borrowing money for expenses that a person incurs everyday is a sign of problem. People who borrow money habitually won't be able to differentiate their wants from their needs. It is better to avoid those people when they ask for a loan.
Hope the above tips will make things easier for you and it will be easier for you to decide whether or not to lend money to your friends and family members.