Greetings,
What's the hardest thing for us?
Attending a function we are not interested in? NO.
Inviting a relative with whom we don’t get along well enough? NO
Donating Blood? NO
We all would have gone through this situation.
A close relative/friend comes and hesitantly asks for some money. He promises to repay as soon as he gets some money STUCK SOMEWHERE.
One of the hardest things for anyone is to look into their eyes and say
NO…. I CAN NOT GIVE.
The majority tend to lend money to family/friends since relationships can be ruined if you say NO.
And the thing HARDER than giving money is TAKING BACK that money.
The awkwardness will be highest when you meet the person you have lent a loan to and the loan has not been repaid for a long period of time.
GIVING MONEY IS ONLY 1 PART OF THE STORY…. GETTING BACK/TAKING BACK THE LENT MONEY IS THE REAL CHALLENGE.
Remember the Ramayana story?
Lord Rama asked for help for Sugreeva in finding Sita.
Rama kills Bali and Sugreeva becomes king but starts enjoying his palace life so deeply that he forgets who helped him.
Then Laxman had to give Sugreeva a STRONG WAKE-UP CALL
Exactly what could happen when you lend money to your friend/relative
You too may be forced to remind and ask for your own money!
What an irony!
You cannot ask, as this could jeopardize the relationship
And you cannot keep quiet as this is your HARD-EARNED MONEY.
Yes, there exists a kind of UNWRITTEN rule which we all know and that is
NEVER MIX MONEY WITH RELATIONSHIPS
We have been witness to many stories of
a) Brothers/sisters not talking for years over a borrowed money issue
b) Friends breaking multiple years of friendship over Borrowed money
But How to deal with such a situation?
What's the best option?
Here, we will try to help with some practical tips which you can use to come out of such stressful situations
1. BE FIRM. BE BOLD IN SAYING NO.
Make it an Unwritten Policy that you will NOT lend money to anyone come what may.
Don’t lend even a small token amount. Once you decide that you will never lend., it will be easier to say NO.
You will not even have to find an excuse to say. Be open and bold to say NO. I HAVE NEVER LENT MONEY AND I WILL NEVER LEND.
Gradually, your circle of friends and relatives will realize that YOU WILL NEVER LEND MONEY and they will not even think of coming to you for borrowing
2. Offer help in Other ways
A good way of saying No to Lending Money is to offer help in a non-financial way.
a) Suggest ways and sources where they can take a loan
b) Suggest a way to manage debt
c) Suggest ways to arrange money without taking a loan maybe by selling some assets
d) Take Loans against FD, Insurance policies, Investments, etc
BTW, If you are truly adventurous you can consider signing as a GUARANTOR for the loan your friend/relative is taking
(Remember, this is a very DANGEROUS thing to do as if your friend does not pay the loan back, then YOU will be liable to pay the same including interest)
(Remember, this is a very DANGEROUS thing to do as if your friend does not pay the loan back, then YOU will be liable to pay the same including interest)
3.
GIVE MONEY AS A GIFT :
If the friend/relative is someone who is truly in genuine need of money and someone very close to you, instead of giving a loan, give them money as a GIFT and ask them NOT TO REPAY and treat this as a GIFT.
This way, you are
A) Helping a close genuine friend
B) Bringing them out of a miserable situation
C) Enhancing your relationship to a new higher level
4. GIVE MONEY WHICH YOU CAN AFFORD TO NEVER SEE AGAIN
If the friend/relative is someone whom you don’t want to antagonize, and you feel that the money MAY not come back, lend only a portion of money which you can AFFORD TO NEVER SEE AGAIN.
Sometimes, relationships take the upper hand, and instead of getting into a messy situation, you can lend money but make sure it's only that money that you are okay to see never see it come back again.
5. GO FOR A WRITTEN AGREEMENT :
In case of a situation where you cannot say NO and you are giving quite a substantial amount, be bold, be practical, and go for a FORMAL WRITTEN AGREEMENT.
There will be people who could try to take advantage of borrowing money and never return the money and it's better to be practical to have a written agreement as this makes the borrower be financially obligatory and responsible to pay back.
In fact, if the person taking money from you is indeed genuine and clear in his heart to return the money, he will not say NO to Written Agreement.
6. TAKE TIME
Yes…Take Time.
If it’s a relationship where you are in not a position to say NO.
Take time. Tell them I need time to arrange the money
2 things can happen here
a) Your friend/relative could have arranged an alternative (if it was truly emergency and urgent)
b) You would have time to look at YOUR finances and decide HOW MUCH you can afford to lend
c) You would also have time to re-look at the RELATIONSHIP between the 2 of you and then decide the next course of action
“You are today who you’ll be in five years except for the people you meet and the books you read.” –Charlie “Tremendous” Jones
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FINALLY,
When a friend/relative does come for financial help, understand the situation, analyse, and to begin with SHOW SOME CONCERN.
They turn up to borrow money only if they are comfortable sharing their grave financial situations and they too would have thought multiple times before coming to you asking for help
But, ultimately, it's your HARD EARNED MONEY, there is no need to lend money putting your financial security at risk
No need to get a GOOD NAME and lose your HARD EARNED MONEY by lending and not getting back. Don’t be emotional while dealing with money but at the same time, make sure the relationship does not turn sour.
Most importantly, avoid SHOWING OFF YOUR WEALTH
People feel like coming to you when you show off your Wealth and assume you have loads of money and easily spare a few lakhs for them.
All the best
Regards,
Srikanth Matrubai
Author, DON’T RETIRE RICH
If you are planning to lend money to any of your family members or friend, then make sure to set clear boundaries. Do not put your financial security at risk.
All the best,
Regards,
Srikanth Matrubai
MUTUAL FUND DISTRIBUTOR
REBALANCE VOLATILITY CERTIFIED COACH
Srikanth Matrubai, Author of the Amazon Best Seller DON'T RETIRE RICH
Srikanth Matrubai
Author of the Amazon Best Seller DON'T RETIRE RICH
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