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“Just a few hundred this time, I promise I will pay it back.”
“If you care for me, you would give me what I ask for.”
“It’s not even a big deal. We’re family, you should help me out.”
While people don’t really like to talk about these situations, the truth is that these things happen more often than you think. Needless to say, mixing relationships with money can be tricky business. On one hand, you may be inclined and pressured to help out of goodwill, but on the other, you could feel distrustful, uncomfortable or not be in a good financial position to help at all.
Even if you’ve never found yourself in a similar situation before, it’s good to be prepared if it occurs. After all, these kinds of requests could come from anyone. It could be your best friend or a friend you haven’t met in a long time. It could be your parent, spouse or relative, adult children or even someone knocking on your door seeking a donation. Simply knowing how to respond can go a long way in helping you protect yourself and the relationship at stake.
To help you along, here are some guidelines to follow to decide if you should lend money to someone asking, and how to decline politely if you decide not to.
This question is a weighted one, as you may find your values conflict with each other. As you read through the following guiding questions, it’s important to be honest with yourself! Try not to let emotions get in the way of making good financial decisions for yourself and those around you.
There may be instances where your loved one is seeking a cash gift instead of a loan. The difference between these is that for a loan, the borrower intends to repay the money. On the other hand, you cannot expect the repayment of a cash gift.
Despite the difference, these are still important questions to ask regardless of whether it’s a loved one asking or not!
Just like making investments, when you lend someone money, there is an unspoken risk you might lose it all. As such, it’s best to only part with your money when you can afford to lose it without detriment to your well-being.
It will not be good when you need the money you loaned out and have to chase the borrower incessantly to return the loan. In the best-case scenario, the borrower returns the loan in full at an earlier time, but in the worst-case scenario, the borrower goes MIA, and you’re in a situation that could have been entirely avoided if you had not loaned out the money.
If your answer is —
YES: You may consider lending this amount of money.
NO: It would be better to decline at this stage.
To avoid mixing emotions with money, a strategy you can employ is to think as a bank would, in ways like:
Of course, chances are that the borrower will not have all these prepared when he or she first approaches you. What’s important is a willingness to agree on a specific repayment plan, or to sign a promissory note with you. You should also assess if the borrower is trustworthy enough to keep to it or capable of fulfilling it. Having another guarantor sign off on a promissory note is also a good idea. Be sure that the guarantor is a real, contactable person!
If the borrower dismisses the idea of a repayment plan or seems reluctant to sign a promissory note, it’s a big red flag that he or she is unlikely to follow through on repaying the loan in the first place.
If your answer is —
YES: You may consider lending this amount of money
NO: It seems like the borrower is untrustworthy.
When the borrower comes to you seeking a loan, you should always ask what the loan is for — especially if that information isn’t willingly offered to you in the first place. If it’s for a business, ask for more specific details, such as what costs the loan will be used for, why the business could not cover it on its own, and what the projected growth is for the business.
Similarly, for a personal loan, be sure to ask for specific details on what the loan is for and how the borrower plans to return the money. Sometimes, your loved one might need money urgently to cover an emergency expense, such as medical bills. As a rule of thumb, if you have the resources, lending money for genuine reasons or a one-time crisis is all right, as long as the loan is not enabling the borrower to spiral even further down into financial ruin. For example, some borrowers may require money for gambling, making an unwarranted purchase, or building a financially unsustainable and badly managed business.
If your answer is —
YES: You may consider lending this amount of money.
NO: It’s better to decline and perhaps offer help in other ways.
Remember, saying no doesn’t mean you’re a bad person or that you don’t care about the relationship! It is never a reflection on you as a person. How you choose to use your money has nothing to do with how much you love and care about others.
Here comes the tricky topic of learning how to decline. No one likes to be seen as unhelpful, especially to a loved one, but if you’ve decided not to loan the money based on the previous decision tree, stick to it! Here’s how to decline a financial request and still have the best chances of preserving a good relationship.
If you’re more conflict-avoidant, you may be tempted to wait as long as possible or delay a tough conversation. However, responding promptly, within two or three days, is a better option. This way, you show the borrower that you respect their time and are considerate of their situation.
On the flip side, if the borrower demands an answer immediately, tell them you need at least a day or two to think about it. If they really need it that urgently (under a day, in the next hour, etc), it’s best to get someone else close to the borrower involved as well for a discussion on how things got to this state and the best way forward.
When in an unpleasant conversation, the tendency to be unclear is very high. Instead of being firm and saying no, you might be tempted to add disclaimers, such as “oh, that’s because I don’t have money now, but in future, it might be possible”, or “I don’t agree with your choices, but if you really need it to survive, come look for me again”. Having an overly long explanation or these qualifiers will create a false expectation that you are willing to lend and make you seem vulnerable to future asks.
Instead, be clear and to the point. Don’t beat around the bush; be concise and polite. Go straight to the point and state your reasons. You may want to write down or prepare your reasons beforehand to keep you on track and remain firm in your decisions.
If your reasons are sound, there is no reason for your loved one to take offence. If they start being unreasonable or demanding, it’s best to walk away.
If you are not willing to help out financially, it’s still important to let the other person know that you still care. One way to show that you are genuine is to offer help in other ways. For instance, you can offer to help emotionally by being a listening ear for the other person. You can also offer time to help out, or even take on some responsibilities for them to free up time to deal with their financial problems and brainstorm solutions. Specific to businesses, you may make time to look at their resume or business and offer suggestions to improve it, or link them up with contacts you have that will help them grow.
If someone close to you is asking you for money and you wish to decline, sometimes it can help to ask them to weigh if money is more important than the relationship. Make it clear to them that you are uncomfortable lending money to loved ones as you know the effects it can have on a relationship, and more importantly, that you want to preserve your relationship with them.
This should be used as a last resort and only if you have another debtor. In this case, instead of loaning out a new sum of money, direct the person to collect from someone else who owes you money. This way, instead of incurring debt, it is simply a transfer of debt, meaning you won’t lose any more money.
It’s not uncommon to be in a situation where you keep getting pressured, especially if you’re a woman. After all, women have always heard things like “men know more about money than you do”, or “women are not good at counting”. If your older sibling, parent, or spouse pressures you to give them money, you may feel like you need to be a “nice girl” above protecting your money and yourself.
Sadly, this situation is even more prominent in some developing countries, where wages in general and the cultural status of women tend to be lower. This also tends to happen more in certain groups such as Overseas Foreign Workers (OFWs), who may be forced to send money home with no control over how it is saved, or if it is even saved at all — even if it means wiping out their entire earnings, accumulated over years working in a foreign land and away from their loved ones. Simply saying "no" is culturally a huge hurdle for many women.
Regardless of your gender or your background, it is unacceptable for anyone to force you to hand money over against your will. After paying tax, you’re entitled to keep the money you earn! Here’s what you can do:
Put simply, financial aid is not the only way to help a loved one. In fact, helping your loved ones to be financially independent is the best gift you could give them (even if they disagree!). After all, it’s unsustainable for you to keep giving, and for them to keep relying on others in the long run. The next time a loved one asks you for money, use this guide to decide if that’s a good idea and for the steps to take if you decide that the answer is NO.
HOW TO SAY NO. COMPLETED. ✅
Sources:
MoneyFitt (ProConnect Technologies Pte Ltd) is not responsible for any errors or omissions, or for the results obtained from the use of this information and shall also not be liable for any damage or loss of any kind, howsoever caused as a result (direct or indirect) of the use of the app and its features, including but not limited to any damage or loss suffered as a result of reliance on the app. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information. The information contained is not intended to be a source of advice or credit analysis with respect to the material presented. Any ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial, tax or legal professional and independently researching and verifying information. We do not provide any financial advice, nor are we licenced to.
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