If a family member or friend who’s going through a hard time asks you for money, it can be hard to say no. However, giving out loans can strain your relationships and your finances, especially if you never get your money back. Here are 15 people you should probably be careful about loaning money to.
1. New Boyfriend or Girlfriend
It’s a bit of a red flag if your new boyfriend or girlfriend is already asking to borrow money from you. Spotting them money now will set the tone for the rest of the relationship and give them the impression that you’re ready to foot the bill.
You should probably say no to their request to avoid being taken advantage of financially. You may even want to rethink the relationship depending on how they react. If they criticize you or won’t stop asking you for cash, it may be time to move on.
2. Your Ex
Your ex may be used to calling you to ask for help when they’re in a crisis. But you can’t allow that kind of codependency to continue by bailing them out. They need to learn how to make it on their own without you, so it’s probably best to deny their request for funds.
3. Your Siblings
Allowing siblings to borrow money is sometimes a bad idea. If they don’t return your cash in a timely manner, resentment can begin to form and damage your relationship. However, family obligations can cause you to feel compelled to lend them cash.
If you agree, make sure you outline a clear timeline for repayment. Additionally, don’t lend them more money than you can afford to lose. If they can’t pay you back, you may have to consider that money a gift instead to avoid hurt feelings.
4. Your Parents
Your parents gave you life and took care of you for eighteen years, so you may feel like you owe them financial assistance. But lending them money can complicate your relationship by introducing a new power dynamic according to Yahoo Finance. If there’s already some tension between you, your relationship may not be able to handle adding money to the mix, so tread carefully.
5. Your Kids
These days it’s not uncommon for parents to provide their adult children with financial support. But experts suggest making it a gift instead of a loan if you can afford to. Expecting your kids to pay you back can lead to hurt feelings and disappointments if they don’t, so it may be better to consider any cash you give them as a present.
6. Your Friends
You love your friends, so it’s tempting to help them out when they’re going through a rough patch. But bailing them out financially can create an awkward dynamic between you, especially if they drag their feet on paying you back.
If you value the relationship, it may be better to find other ways to help them, such as providing a listening ear or pointing them in the direction of local financial assistance programs.
7. People Who Never Pay You Back
Although everyone’s financial circumstances are different, it’s disrespectful if someone doesn’t at least make an effort to pay back the money they’ve borrowed from you. If they can’t afford to repay the whole sum, they should try to send you money in small installments. It’s unwise to allow someone who never repaid you anything to continue borrowing money from you.
8. Your Work Colleagues
Spotting your colleague $10 to buy a drink at happy hour because they forgot their wallet may not seem like a big deal. But you probably shouldn’t get into the habit of lending money to the people you work with.
The relationship can become awkward if you’re always chasing them to Venmo you back for lunch. And if you need to be able to collaborate with them to do your job, financial disagreements could hurt your work performance.
9. People Who See You as a Piggy Bank
We’ve all had people in our lives who see us as a piggy bank and constantly have their hand out. These people frequently ask to borrow money, expect you to give expensive gifts, and always want you to pick up the dinner tab. Ask yourself if relationships with takers who never make an effort to reciprocate are worth it.
10. Strangers Online
Strangers online who are begging for money may actually be scammers. Although you don’t expect to get your money back when you donate to a GoFundMe campaign, you do want it to contribute to a good cause. But sometimes your money may be going to fraudsters who take advantage of people’s goodwill by spinning fake sob stories.
Crowdfunding campaigns for new businesses on websites like IndieGoGo and Kickstarter can also go sideways. Before donating, keep in mind that there’s no guarantee that you’ll get the products or perks you’ve been promised.
11. People Suffering From Addiction
Lending money to people who are suffering from an addiction to substances or shopping is usually a bad idea. Giving them extra funds to spend only serves to fuel their addiction. They may need to hit rock bottom in order to see the error of their ways and resolve to change their behavior.
12. People Deep in Debt
You should try to avoid lending money to people who are deep in debt. Because they have so many loans to repay, the money they owe you may fall to the bottom of the priorities list, especially if you aren’t charging them interest.
13. Peer-to-Peer Lending
Peer-to-peer lending involves giving an individual or small business a personal loan using your own money. Although you can earn interest when the loan is repaid, there’s no guarantee you’ll actually get your funds back, so proceed with caution.
14. Aspiring Entrepreneurs
Be wary of a family member or friend who’s offering you the chance to invest in an “amazing” business opportunity. All businesses involve risk, so anyone who’s promising you guaranteed returns is likely inexperienced and unaware of the pitfalls of starting a company.
15. Unreliable People
People who are unreliable in other aspects of their life may not be the best at paying you back. If you have a friend who’s always late or has trouble keeping a job, you may want to think twice about loaning them money.
Be Careful Who You Loan Money To
To sum things up, it’s important to be careful and discerning about who you loan money to. If you want to get your funds back, make sure the person you’re lending cash to is reliable and establish a clear repayment agreement.
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Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.