Should I lend my friend money?
Lending money to a friend can be risky both for your finances and for your friendship.
While the safest answer might be a simple “no,” sometimes we want to help a good friend. Lending them cash could get them through a difficult period and we might want to know we could turn to them for the same kind of help in the future.
The first question to ask yourself is whether you feel pressure to help or if you genuinely want to. If it’s a real desire, then next it’s time to assess whether you can offer help without hurting your own finances. Do you have enough in reserves that you can continue paying your bills and meeting your other financial goals?
Also, you might want to ask your friend for more information. Are they facing a temporary or long-term financial hardship? Can you help them in other, nonfinancial ways, such as coaching them through a job search process?
Perhaps you could offer to do their grocery shopping or pay one bill for the month. Those more defined forms of help can offer assistance within boundaries.
Some kinds of help, such as co-signing a loan or adding a friend as an authorized user on a credit card, are so high-risk that financial experts suggest avoiding them altogether. After all, if your friend overspends on your credit card, you are ultimately responsible for those payments.
It’s also worth viewing any “loan” as a gift, because you might never see that money again. And as long as you are okay with that, there’s nothing wrong with choosing generosity. Just make sure you’re not hurting yourself in the process.
