I have to first disclose this post isn’t about anyone I know, or an experience of mine, but it has definitely happened to people in my life. In fact, I have never experienced the scenario I describe below, in those exact terms. And I didn’t ruin a friendship, in those exact terms, but me and my best friend at the time got in a fight and we definitely weren’t as close afterward. Money and friendship rarely mix.
She was staying with my at my apartment because she couldn’t afford a place to live, and every morning when we woke up she would ask me about an item she was about to purchase on one of those flash sale sites. I wasn’t mad she wasn’t paying rent, I genuinely loved having her there. This was during my crazy NYC debt pay-down phase, and I was mainly pissed she wasn’t taking responsibility for her financial life. I mentioned to her how I thought her buying stuff in front of me was a) rude and b) irresponsible. I also made the mistake of venting to a friend who later told the girl living with me I was “talking about her behind her back”. Needless to say, the friendship was never the same, but the tips below work just as well too.
3 Easy Steps: How to Ruin a Friendship
Step 1: Friend A asks Friend B to borrow some money. Friend A is simply down on his/her luck and needs a little boost. Friend A promises to pay Friend B back.
Step 2: Friend B agrees to lend money to Friend A, with the understanding that Friend A will pay Friend B back in a timely fashion.
Two months pass without payment.
Step 3: Friend A calls up Friend B to talk about the vacation that he/she is booking for next month. Friend B grits teeth down to nubs and breaks off friendship with Friend A. Well, not really. Friend B doesn’t tell Friend A their friendship is over, but Friend B is no longer available when Friend A wants to chat, hang out, or borrow more cash.
Ta-da! And that folks, is how to ruin a friendship.
My Reasoning
Lending money rarely works out when it comes to friends and family members. It just doesn’t, and I’m not talking about ruining a friendship over $20 for lunch. We are talking a firm loan for a bigger purchase like school, a house, or an opportunity. This never works, because I’m going to tell you who is asking you for money:
- Someone who cannot get a loan through an establishment. OR
- Someone who doesn’t apply for a loan through an establishment because they don’t plan on paying it back anyways.
Disclaimer: This is a general rule. There are always exceptions. You may be that exception, but you may not be. If you are willing to risk your money and your friendships over the possibility that you are the exception, then that is entirely up to you.
My advice is to pick an amount that you feel comfortable losing – $5, $10, $50, whatever – and don’t lend a friend more than that amount. Never lend a friend (or a family member for that matter) money you need and/or definitely expect to get back. While you and your friend may be the friend lending exception, it is best to assume any money you “lend” to someone is a gift. You will save so much resentment that way.
After all, you are not a bank. Your friends are also not banks.
If your friend is down on his/her luck – for real, not because they just came back from an extravagant vacation or asked you for cash in the same breath as “look at my new shoes” – and you want to help, you totally should. Give them a gift of cash to help them out. They will promise to pay you back, so smile and nod politely and consider the money gone. If they happen to come through and pay you back in full, it will be a nice surprise and you will have your cash back. If not, you didn’t expect it anyways. Yay, for low expectations!
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Have you ever borrowed money from a friend or lent money to a friend? How did it work out for you? What are your “money lending rules” when it comes to friends and family?
Hi, my name is Lauren but I'm known to those nearest and dearest as L. Bee. After twenty-five years on the planet I have worked in a lot of industries, moved to many different cities, and made almost every money mistake you can make.Join me on my journey as I navigate my twenties and try not to pick my "money tree" bare.
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I have had a few cases where I have lent people money only to have them not pay it back. That’s why I only lend to a select few people now, the rest will have to find someone else to borrow from.
Glen @ Monster Piggy Bank recently posted..Spring Break and my Misspent Youth
I agree that friends shouldn’t borrow money from each other. I would gift my friend money if she needed it, but I wouldn’t expect it back. That way I wouldn’t end up mad when I wasn’t repaid.
Holly@ClubThrifty recently posted..Spring Into Savings With These Money Saving Tips
SO TRUE. This happened to me while studying abroad.
One of my friends just kind of “ran out” of money and needed help to get by. Five or so of my friends (her included) went on a trip where everyone just kind of picked up her tab–hotel, food, outings, etc. Feeling like I couldn’t be the ONLY person who denied her, I paid a few hundred dollars toward her trip. That was a TON of money to me at the time, and I really needed to get it back.
She “paid me back” 5 months later with like, $60. She said “this covers the cost of the soccer game we went to, I checked the ticket prices online.”
Needless to say, we haven’t talked since. I felt resentful and she felt embarrassed, and it was a sad ending to an otherwise beautiful friendship.
Never doing that again.
Woah! She just expected you to pay? Rude!
All of my friends were like, “awww…we want you to come, we’ll help pay!” and then I got suckered in, too. Suuuckks.
Ahhh…a friend of mine did something similar although not on such a large scale. She claimed to not have any money and said she had a $10 budget to go out for a drink. My BF & I thought a drink would be nice and that would be it. So we went out and she started to order a bunch of apps, etc. while I was in the bathroom. BF had no idea what to do. Then we all ate and when it was time to pay the bill, she didn’t offer one PENNY.
I chalked it up to an ignorant anomaly until the next night when I saw her checking in left & right on FB and posting about what a great time she was having. I couldn’t help but wonder who she’d suckered into paying for that night out, too!
The Happy Homeowner recently posted..How Happiness Saves You Money
So many stories, so little time….why do friends even go to friends to borrow cash? It can’t end well. Maybe that’s what I’ll do when I want to get rid of an annoying so-called “friend.” Ask them if I can borrow $100.
AverageJoe recently posted..Makin’ Mo’ Money – Two Guys and Your Money Episode 31
I have lent to a friend in the past but really do not anymore. Now, if I run into the situation, if the friend is truly in need I’ll just give the amount I can and not expect it to be paid back. That generally has worked much better for me and gets rid of some sort of expectation.
John S @ Frugal Rules recently posted..Happy Six Months to Frugal Rules!
I was lucky to learn my lesson about lending money to friends in highschool when it was 5 or 10 dollars. It only took a few times before I realized I never wanted to do it again. SO AWKWARD
Mandy @ MoneyMasterMom recently posted..Becoming a Mom
Me and my friends try not to ever borrow from each other. Of course I have one friend who never minds me paying for things though (this is a good way to lose a friend).
Michelle recently posted..$1,358 in Extra Income and Awesome Life Updates
Consider using collateral. I know that’s not very friendly or whatever, but it kept my situation from getting out of hand. Just say, I’ll buy that “whatever” from you for $”amount they need” and then say they can just buy it back whenever they have the money. And I agree, don’t ever do this unless you’re perfectly willing and able to never see that money again.
I have lent money to a couple of friends and had different outcomes. I like the saying “if you lend money to a friend and never see that friend again, it was money well spent”.
Pauline recently posted..Little house in Guatemala, week 18-19
Ha! Clever
Borrowing or lending money definitely adds a new facet to relationships so I always avoid it or treat it like I will never get the money back. I will loan a few dollars to friends but once they don’t pay me back before asking to cover another meal (or other expense)they are cut off.
Lance @ Money Life and More recently posted..Moving Soon? How and Where to Get Free Boxes to Save Money
I never lend money to friends, because I`ve seen what the results could be. BF has this friend that keeps calling him at random hours asking to lend some money, because he has “nooo money”, as if trying to guilt-tripping BF! And next thing you`ll see on facebook is this friend out on the town buying expensive champagne for random girls… And what`s weird about this is that the guy actually owns his own 3-bedroom apartment! So keep money and friends apart, unless you want to lose them both.
The Norwegian Girl recently posted..Why a $100 Concert ticket was worth every dime!
No way in hell, man. I keep a printout of Len Penzo’s “Dear Friend: Here Are 41 Reasons Why I’m NOT Lending You the Money” at home. Anytime a friend gets dumb and asks for cash, I say, “Read this.” I have #36 highlighted. Friends get the message pretty quick and back off.
http://lenpenzo.com/blog/id15845-dear-friend-here-are-41-reasons-why-im-not-lending-you-the-money.html
Looove Len Penzo! He’s one of my faves.
Weeell, I have been that lame friend who borrowed money from friends and I have been the friend who loaned money to friends. In general neither scenario works. I will write a post about a specific situation sometime in the future. I was lame and I own it! At this point I only give what I can lose. It works well because my friends will buy me things after I’ve forgotten all about buying them something. There is a fine line between being generous and loving and being taken for granted. My lovely group of friends have found the right balance in dealing with these situations. I do have one friend who we have stopped inviting to events that cost money. She never pays what she owes, is too cheap, and it creates stress. We just go hiking with her! It’s free
What if there was a one in lifetime event that both you and your bff have always wanted to go to? And the chance came up but your friend was newly unemployed. However he said “let’s go”, and you thought that it means he could pay for himself via past savings etc because he had never hesitated to say no before when he was broke. So you paid for the air tickets and registration fees upfront, understanding that you would be paid back. But right after making payment, your friend asks you if you minded that he paid you back only after he gets a new job since he is broke. And when you ask him why he didn’t just tell you before you paid up, because both of you could just not go, he says, “but it’s a one in a lifetime thing, and YOLO. You can always earn the money again.” And when you hesitate, he says he has got to borrow the money from his mother if you insist on having the money upfront. And you remember his mother is a near retiree and single mom and not very well off, and you aren’t heartless enough to take the little she has. And so you end up making the loan of $2700.
I’ve never believed in lending friends money before the episode but what does one do when one gets baited and switched into it?
To end the story, it has been almost 3 years, and he is still underemployed, and I haven’t seen a single red cent. I have since written off the loan and we are still great friends, although i struggled with the decision for over a year. I still don’t lend money to friends, and i’ve got an additional rule…never offer to front ANY payment to ANY one unless i have no problems gifting it. Oh, and I have since learnt to totally despise YOLO, especially when it is done on my dime.
I have seen this happen as well. I’ve never had a friend ask me for money, so I guess I never was faced with having to deal with this, but I think I would be very, very cautious before I ever did it.
Budget & the Beach recently posted..Fear of Not Having Enough Money
My family has definitely had experience with this. My father’s brother borrowed a bunch of money from my grandparents and never paid it back; it was a HUGE point of contention for the rest of their lives. My parents loaned me some money during school at a point when I needed it, and my dad made sure to say as soon as I was working that I needed to pay it off asap because he didn’t want it to become a family issue. I completely agreed, and after very generously letting me buy a car off of him in installments (I gave him a monthly cheque) I will be paid off completely at the end of tax time this year and will hopefully never need to borrow or loan money again. It can definitely be dangerous to let money interfere with a relationship.
Lending money to friends is usually a bad idea. I have never lent money to a friend, but have given a friend some money without the intent on getting paid back. Lending money to a friend is certainly a fine line to walk.
Jon @ MoneySmartGuides recently posted..Financial Lessons Learned From The Bachelor
I won’t post this up on my own blog, but my parents “borrowed” over $10k like 7 years ago, and I don’t expect to see the money. Actually, I told then to their faces that the debt is forgiven, because the relationship is much more important. Would it be nice to have another $10k? Sure. Is there even a remote possibility I would ever see it? Nope. So I emotionally gave it up, forgave the debt, and left it at that.
But yea, don’t loan money that you expect to see back. That’ll f things up for a long time!
Jacob @ iHeartBudgets recently posted..How To Begin Investing
I think you’re spot-on. When you loan money to friends and/or family – you do so with the expectation of never being paid back AND being okay with that. If you will be resentful, then don’t loan them the money or only give what you loan without being upset about later. It also says a lot about the friend too. I’m well-aware that lean times can last a long time, but be upfront about it. Admit that times are still tough but you haven’t forgotten about the loan.
Shannon @ The Heavy Purse recently posted..Money Conversations: Shopping with Taylor
I lent 100 bucks once and the friend stop calling me to hang out, it was crazy. I also have lent to another friend and co-worker but this time it was paid back on time. I guess my stance on it is Ill give you if you are in a tight stop, and I will not call it a loan just a gift. When it is given in those terms then you can move on and be friends.
Rich Uncle EL recently posted..The Money Mojo?
I won’t lend money to anyone that doesn’t brown bag their lunch, or who has any type of credit card debt. Sorry, I just can’t help! Nice post!
Johnny Moneyseed recently posted..Making an Ass out of U and Me
Never borrowed from a friend, but have lent money. I would never lend out more than I could afford to lose (just in case I didn’t get it back) and I always go in with the expectation I *will* lose my money. So then when it’s paid back it’s like an added bonus.
Lending money to friends is really a gift in most cases. This money is usually never returned and the friendship ends. My dad once sad to me never lend money to friends and I could not get how absolute this statement was, but I now understand it. Think of it as a gift because that what it is.
STEVEN J. FROMM, ATTORNEY, LL.M. (TAXATION) recently posted..Estate Planning 2013: Now What? A Must Read For Everyone
I absolutely will not lend money to friends–I will cook you dinner, give you a bed to sleep in, etc, etc, but I won’t give you money! It’s too much of a loaded proposition to expect your friendship to also take on money stresses.
The Happy Homeowner recently posted..How Happiness Saves You Money
No, I don’t lend money to my friends at all and neither does my wife. She has in the past but the said person seems to forget about it and she hates having to ask for it back. It should not have to be that way. The person who borrowed the money should give it back in a timely fashion or by said date that was agreed on. That’s likely why we don’t talk about our finances with our friends. Sometimes what they don’t know is better but I’m also not shy to say, sorry mate, we ain’t got none! Cheers
Canadianbudgetbinder recently posted..PF Weekly Reading List #11- Free Money, Want Some?
I don’t actually lend a friend more than $50 because I am not the type who ask to have to pay me back. I always just wait for that friend to pay me back which is why I can’t lend more than that amount.
Jeremy Norton recently posted..How to Become a Private Banker