Money Rules

Recently I was asked to loan a friend a substantial amount of money. I was caught off guard and was surprised by the request. It took me a full half hour to check in with myself and respond.

Here is what transpired..

I said NO.

I said NO because I did not expect to be repaid this amount and I didn’t feel comfortable giving this money away as a gift.

I said NO because I felt I was enabling this individual’s money situation.

I offered to HELP this individual with money mindset and practical steps like learning to budget.

This situation got me thinking.

What Money Rules should we have as far as loaning money?

Here is what I came up with.

  1.  Identify the people who consistently ask you for financial help. Keep a list of people who consistently ask you for a loan. Track the amount, date and reasons for lending them money. Trust me on this. You will start to see the pattern by tracking.
  2. Are you helping the situation by loaning or gifting them the money? Try to get as much underlying information as possible. What is the loan needed for? What will they do with the money? What situation do they need to address by borrowing this money?
  3. What emotions come up for you when they ask for money? Do you feel guilty, empathize with them or feel obligated to loan (i.e give) them money? Based on the emotions you feel are you saying YES or NO to the loan? If you loan them the money because of a negative emotion like guilt it really means you are not comfortable with this loan.
  4. If you decide to loan them the money; ensure you have some type of written agreement with date, time, and a schedule showing the repayment amount and terms..
  5. Say no with love and kindness. Do not be afraid to say no, if your instinct tells you this is the right thing for you. You can say something along the lines of “I am sorry I have a personal rule not to loan money.” Offer to help in some other way that does not involve you loaning or gifting money. I have found that by saying no, you are establishing money boundaries. For some people, they may be fine with this and accept it without much ado. For others, they become angry because you did not say yes to their request. They may even stop being friends with you. It is tough saying no, especially if this is someone you are close to.. But stick to your guns and if they decide to walk away from your friendship then it was not a healthy relationship to begin with..

I would love to hear your “Money Rules” stories below in the comment section!

 

 

 

 

 

 

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