How would you feel if your pockets are running dry, then one of your relatives starts expressing his or her intention of borrowing money from you? What would you prioritize, your own concerns or the needs of your relative? This can be a huge dilemma, especially for us Pinoys who are known to be very family-oriented, ones who will put their families first before anything. So, if you are the ones feeling the pressure of having to answer the questions above, here are tips that can help you decide whether it is smart to lend money to your relatives.
Consider the effect on your finances.
Before you say “yes” to your relatives, be sure that you weigh the condition of your pocket. If you’re going to lend them the money they need today, will you be able to pay your bills on time? What expenses will be sacrificed if you decide to say “yes” to them?
Lend cash only.
If you are going to say “yes” to them, it is always better to lend cash only. If they ask you to be a co-signee for some of the loans they’re planning to take, think twice, thrice or even four times. Just like what banks do, see if they really have the capability to commit to the loan they are planning to get. Otherwise, let them borrow cash only and remember, you are lending them money and not giving away money. You can never trust anyone too much, even if they are your relatives.
Come up with Plan B.
Before you lend money to your relatives, be sure that before you hand it to them, you have already thought of the worst thing that could happen if they fail to pay their debts on time. You should come up with a Plan B – a plan that can save you from hitting rock bottom if your relatives do not manage to pay you on time.
Know what the money is for.
Of course, you don’t just lend your money to them just because they are your relatives. Before anything else, ask them to give you the full details regarding where they are going to use the money they are trying to borrow from you. Know if it’s for a good cause. If you feel secured about the reasons they are giving you, consider lending them the money that they need.
Know when to say “no.”
Be smart enough to weigh your decisions and don’t just say “yes” all the time. Yes, they are your relatives and yes, they can have big needs. However, you should also consider your financial condition, so you won’t end up being the one who’s in dire need of money.
Indeed, it is difficult to resist and say “no” to your relatives, especially if you see how much they need your help. However, if you just know how to balance the flow of money in your pockets, you can help your relatives and stay financially stable at the same time. But more importantly, when it comes to this matter, the number one rule is to never lend the amount of money that you do not have.
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