March 8, 2013
Lending Money in Relationships: A Toolkit
I received an email from one of my radio show listeners the other day asking my thoughts about lending money in relationships. I have to first start by saying this is a very tricky situation to consider. Requests for loans in relationships are typically associated with trying to meet the need of someone you deeply care about. Whether it’s for rent, student loans, car payments or to pursue a dream; it can be very uncomfortable trying to decide whether lending money to someone you’re in a relationship with is the right thing to do.
Here are three points to consider:
1. Evaluate the Person’s Character — Character is a great indicator of a person’s likelihood to repay the loan. Creditors utilize credit reports as a way to evaluate a person’s financial character. If they see something on the credit report that is somewhat questionable, they decline the applicant or ask for additional information. You should also consider a person’s character before making a decision to lend money. You may not have access to their credit report, but you should have an idea of how he/she manages their personal affairs if you’re considering lending money.
2. Strip Away the Emotions — There is nothing more potentially devastating than making financial decisions solely based on emotions. Most accomplished business people are great at removing emotional attachments when making financial decisions. You should also consider applying this philosophy when making decisions regarding your financial life.
3. Consider the Impact to Your Personal Life — Can you afford to let the money go? My personal approach to lending money also centers on whether or not I can afford to never see the money again. Even though I take people at their word to repay me, I always evaluate whether I’m able to keep meeting my personal obligations without regard to the money I am lending.
Should you lend money to someone you’re in a relationship with? I can’t give a specific answer without all of the details, but considering the points above should give you food for thought. Sound off in the comments.
Kenny Pugh is a Life & Relationship Strategist, Author of ‘Can You Do It Standing Up?’, Associate Minister, Chat Kafe Radio Show Host, singles leader and sought-after speaker on singleness, relationships, finances and life. You can find more information about Kenny at http://www.kennypugh.com. You can follow him on Facebook at Kenny Pugh or on Twitter @mrkennypugh.