Hints for Helping Someone Financially

Posted by MoneyThinker in debt | 0 comments

When I was in college, I got in a pinch. I was struggling with money (as I always did; I lived paycheck to paycheck because I was a binge spender) and I ended up with a driving ticket. Now, I’m not a terrible driver. It wasn’t even a speeding ticket, I promise! An area of our university had just changed a stop sign to a “no left turn” and I totally disregarded it. I don’t even remember how much the ticket was for, but it was more than I could afford.

So, I asked a good friend if she could spot me. Big mistake. We got in a pretty bad fight. After that, she held it over my head until another friend bailed me out (by paying the rest) to get her to leave me alone. Now, that was a mistake in judgment on my part, but it probably was on her part too.

What are you supposed to do if a friend or family member is in financial trouble and they look to you for help? Here are a couple of tips that you should consider before loaning money.

Don’t just give it… Please don’t do this. Ever. If someone asks you for money, make it a loan and not a gift. This teaches the borrower responsibility for their actions. Now, if it is near a gift giving holiday (Christmas, Hanukkah, Birthday, etc), feel free to give the person some money to help them out, or better yet, gift cards so the money doesn’t get wasted for a different purpose than intended.

…But be flexible in repayment. Don’t be a jerk like my former friend was. If your friend really is struggling, let them give you a little bit at a time. Don’t let them get away with not paying you at all, because the chances become higher that they may forget that they even owe you money. Even if the payment is $5, it’s the consistency that helps the borrower remember to pay you back fully.

Don’t do it all the time… I love my friends and family, but this was their error. They kept giving and/or loaning me money, and I didn’t learn from my mistakes. If a friend continually comes back to you for cash, learn to say no.

…But be generous. Don’t let the fact that someone else keeps asking you for money stop you from loaning money to a different person who’s never asked for a penny in their life. If you have the means, help them out. It takes a lot for someone to ask for help.

Don’t loan to the point that you’re struggling… Here was a mistake that I made. I was still getting on my feet as a freelancer, and I loaned a friend $350. Almost a year later, I got it back…. Right when I needed it for rent. Yeah, I wasn’t thinking. Another friend of mine has owed me about $100 for a year. Not that I’m struggling at all, but it’s still inconvenient.

…But ask for help if you need it too. I haven’t asked for money in a long time. If I’ve needed something, I’ve asked for it as a gift for a holiday. For example, I needed some fillings done because I have tooth problems; I asked my stepdad to pay for them for Christmas. I think I’m back in the “safe zone” now, that I’m not a risk for my friends. I know it’s hard to ask for help, but please, don’t be afraid to, especially if it’s someone you’re close to or that you’ve bailed out before. That’s what friends and family are for.

Loaning money is a risk, no matter how you look at it. But follow these tips and you’ll reduce your risk as much as possible. Until tomorrow, spend smart, save smart!