A Redditor recently asked how to handle a friend who asks for financial help. In this case, the friend was between jobs and asked to borrow $5,000. The problem? The Redditor said the friend was continuing to make bad financial decisions amid the struggle.
While the Redditor’s initial instinct was to say “no,” they felt guilty and were second-guessing their choice.
Commenters quickly jumped in to offer emotional support, urging the poster to stay strong in their decision.
They pointed out that any money lent was likely gone forever, and that lending arrangements between friends can ruin the relationship. Plus, they might just keep asking for more.
For the most part, financial professionals agree with those assessments.
Ask yourself how you really feel
“Do you feel pressured, or do you genuinely want to give? If it’s the latter, then giving them cash is perfectly fine,” says Angie Welsh, founder and president of My Annuity Agents, an annuities firm in the Las Vegas area.
But stand up to any pressure, she adds. “Don’t feel guilty. You don’t need to bring yourself down.”
Sometimes saying “no” is necessary to protect your own financial stability.
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Consider the friendship
The closer the friend, the harder the decision.
“If you are going to lend money to someone, that is going to put a little pressure on the friendship,” says Patrick Yono, founder of Sure Life Financial in Novi, Michigan. You want to make sure the friendship can withstand that kind of strain.
You might be more inclined to help a friend who’s as close as a family member, but you want to ensure lending them money doesn’t hurt your friendship. “You have to prioritize your relationship with that person over any financial arrangement,” Yono adds.
Request details
If someone is asking you for money, you shouldn’t be afraid to ask them why they need it, Yono says. How will they use it? Are they experiencing a temporary or long-term financial challenge?
“If you know they are unorganized and don’t have a plan, then they will probably just ask for money again later,” Yono says.
He cautions against being a friend’s solution to an issue they need to solve themselves.
Avoid certain red flags
Yono cautions against lending money to someone who is likely to use it for gambling or other potential vices, because you might be fueling a deeper problem.
You could hurt your own finances in the process. For example, co-signing a loan for someone could put your own credit score at risk. You’re ultimately responsible for the loan. A person who’s comfortable with you putting your own finances on the line may not be a true friend, Yono says.
Also a bad idea? Adding the friend as an authorized user on your credit card. “There could be long-term repercussions that hurt your credit,” Welsh says, if they rack up charges and don’t pay them.
Look for other ways to help
If lending money doesn’t feel right, you can give the friend a break instead.
Take them out for a meal to talk through their current challenges and brainstorm solutions.
Welsh suggests offering to pay for a utility bill or grocery run. You could also help them apply for a loan, seek out hardship assistance from a lender or navigate the job search process.
If you do ultimately decide to provide some cash, only give an amount you’re comfortable losing.
“You don’t want to be in a position where you are trying to help someone out and you hurt yourself in the process,” Yono adds.
Plus, he adds, “lending someone money is a Band-Aid, not the solution.” The ultimate goal should be to help your friend regain financial stability.
Reddit is an online forum where users share their thoughts in “threads” on various topics. The popular site includes plenty of discussion on financial subjects like how to handle money requests from friends, so we sifted through Reddit forums to get a pulse check. People post anonymously, so we cannot confirm their individual experiences or circumstances.
