The Etiquette of Lending and Borrowing Between Family and Friends

The old maxim:
Lending money to a friend is a great way to become ex-friends.

Of course, that wouldn’t happen to you, because you would only lend to a great friend who wouldn’t be like that with you. Would they?

I am one of those people who freely lends money to anyone I know well, thinking that they would respect the offer, pay me back as soon as possible and would do the same for me. I’m slowly learning…

I would hate to leave somebody in an awkward position if they are stuck for money, because money is evil and controls people’s lives enough already. If I have it and they need it, it’s theirs. Even if means me being short, it’s theirs. I’m not sure they’d always do the same for me, in such extremes at least, but I do think at least I’m helping them out. After all, they are good friends and family, and all more important than money to me.

However, I forget I am not super-rich (yet!), and do actually need the money at some point, probably soon. And the main thing I forget is the awkwardness of having to ask for it back. I hate owing money, I barely ever do, but I do forget my purse or lose my bank card more than I’d like to admit. If I do owe anything, I usually write it down and make sure to pay it back as son as possible. If I have somehow forgotten, friends know, or I hope they do, that they can remind me, and I will hurriedly give it back with many guilt-ridden apologies. Even if it is £5, somebody has been kind enough to help you out and they deserve recognition for that.
It seems others do not necessarily feel this way. And would rather ignore that they owe it. Even after it has been politely mentioned. 4 times. For months on end.

How do you get your money back?

At first, I make excuses for people. Maybe they have forgotten, maybe they are busy at the moment, maybe they are embarrassed about not being able to pay back. Even though if they did tell me this, I’d understand. It is just money, but unfortunately when you have none, you know about it. And I would rather me be a bit stuck than watch somebody else be (first stupid move?).

So, to deal with the first problem: they have forgotten. Of course they have. They wouldn’t purposely withhold the money.
A brief message or call asking if they are able to pay you back anytime soon should result in a quick answer outlining the deal.
No reply?
Probably busy…

Busy: Again, the same method, but maybe with a note that you are aware they are very busy at the moment and it probably hasn’t crossed their minds, but you are running low on funds – because if you have to ask, that is probably the case.
Nothing. Or an excuse saying they will, but actually don’t?

Embarrassed: Maybe just ask without mentioning the money if everything is alright and be a good friend. They may be financially strapped, in which case you can offer to help them organise their funds.

Of course, all the while, you are feeling terrible about asking your possibly forgetful, possibly busy, possibly embarrassed friend for cash. With time, this becomes frustration. Why should you have to ask. Don’t they feel guilty? Even if you’re more wealthy, why should you go without? Do you work just to sort other people out?

I have had a few personal experiences that should have stopped me lending years ago. But for some reason, I always think ‘it’s just money’. Then, when not paid back, it becomes ‘just food that I need, but can’t afford’, ‘lunches I can’t go on with friends’, ‘days and nights out that I can’t have’. And that’s when I feel it.

Types of lending:

  • Large amounts – you lend an amount that you would be uncomfortable losing, in good faith that you have great friends.
  • Regular, small amounts – your friend has not managed to budget, again, and could do with a tenner until payday. This happens often and they do pay back, but you can feel a bit relied upon, and would still feel guilty if you needed the same.
  • Small, seemingly insignificant amounts – it may be the odd coffee here and there, or a few coins for the bus, but if it only goes one way, it can start to grate on you. It all adds up and you realise that it only takes a few times combined to get to the sum you are uncomfortable with.

Things to remember:

  • Somebody who needs to borrow money is likely to be bad at managing money.
  • Do not lend money you cannot afford to lose.
  • You can be supportive in other ways.

How to say no (or just not offer freely in the first place)

This is my big one. It’s not even a matter of somebody asking, I actually offer to lend money if I can see that somebody could use it. Even if it’s for leisurely things. I want them to feel they can do it and not have financial constraints.

I’ve been thinking about this a lot today and have come up with some solutions, with some credit going to random people around the internet.

I have people telling me to do this a lot, but for some reason, I just can’t. My flatmates and some friends have said to me  ‘I don’t lend money’. I’m always shocked. What do they do when somebody needs it or asks them. And then I realise that by saying that line, they are not saying it personally, just looking out for themselves. And I would never ask them if I could borrow any! I wouldn’t ask many people actually, I would rather try to find a way to sort anything by myself. But it works.

You could say you’re short for cash. If they know you’re not, it’s much more awkward, but you could say that it will bother you if you’re not paid back so you’d rather not enter into it in the first place. They can only respect this answer.

What will happen if you say no? Will they stop being your friend? Will they respect you less? Probably not. If they do, do you want somebody like that to borrow money from you anyway?

It is not your job to chase people to pay you back!

If you really want to help somebody with money, do it once. Make sure it is an amount you can afford to lose. If they pay back, it’s a bonus and they’re great. If they don’t offer to, don’t do it again. Ask once if you want to give them a chance.
This is easier said than done, as if they are stuck or in trouble then how can you not help? In this case, I think it would be sensible to make sure you can afford it, tell them you’re not happy about helping them and be honest that you don’t believe they are the type to pay back, but they mean a lot to you, so you will help them.

This is all difficult as this is the part that can make you feel frustrated and let down, and may actually change your friendship.
Rather than seeing it this way, maybe look at it as a lesson regarding this friend. If they are generally a good friend and this is the one thing that stands in the way, try to let it go and realise there is more to them. But don’t fall into the awkward trap again!

If all they call on you for is help and money, they are not your friend.

It should be simple. While I write this, it seems simple. We’ll see how easy it is to follow my own advice. Where do you stand on this?