Navigating the Delicate Dance of Lending: Preserving Relationships and Financial StabilityLending money to a friend or family member can be a tricky proposition, often putting a strain on the relationship if not handled with care. A recent survey by Bankrate found that nearly a quarter of those who lent money or covered a group expense with the expectation of being paid back say it negatively impacted their relationship with the other party. However, there are strategies to navigate this dilemma without compromising your own financial well-being.

Safeguarding Relationships and Finances: A Balancing Act

Setting Boundaries: The Key to Healthy Lending

The common advice of not expecting to receive the money back after loaning it out is a valid starting point, but there's a more nuanced approach that can help preserve both your relationships and your financial stability. Aja Evans, a board-certified therapist who specializes in financial therapy, emphasizes the importance of setting clear boundaries and communicating them effectively."Decide if you can afford to give them the money and if you can't, you may not really be in a position to help," Evans advises. "You cannot potentially sink your own ship to bail out someone else." This sentiment underscores the need to prioritize your own financial well-being before considering lending to others.However, having this conversation can be challenging, as close friends or family members may be aware of your spending habits and make judgments about your financial capacity. Evans reminds us that no one knows your money better than you do. "Just because you have it in your account doesn't mean you can give it, especially if you know other bills are coming."

Lending What You Can Afford: A Balanced Approach

Directly saying no when a friend or family member asks for money can be difficult, especially if you've lent them money in the past. Evans suggests a more nuanced approach: lend what you can afford, even if it's less than the requested amount.For instance, if a friend asks to borrow $100 but you know that giving the full amount would significantly impact your budget, consider offering a more feasible amount, such as $20 or $30. While you don't necessarily owe them an explanation, Evans advises that it can be helpful to honestly communicate the other financial obligations you're managing."That's a healthy boundary because, while you may not be able to give all of what they want, you're giving what you can without sinking your own ship," Evans explains.

Navigating the Guilt: A Necessary Step Towards Financial Stability

It's common to feel guilty after refusing to lend money to a friend or family member, even if you're proud of yourself for setting the boundary. To address this, Evans recommends writing down your financial boundaries and the reasons behind them."Remind yourself what you're trying to achieve and why," she says. "List your boundaries so when they get pushed — and they will get pushed — you can go back and look at your why."While it may not always be easy to get it right, and you may give in to a request for money, especially from a close family member, Evans suggests creating a list of coping strategies to help you feel better. "The list is endless. Take a bike ride, cook something, water your plants," she says. "The list goes on and on, but it's good to have something you know will help lower your stress after a potential confrontation."Ultimately, while setting and maintaining your financial boundaries may be difficult in the short term, it can pay off in the long term and help you meet your financial goals. As Evans emphasizes, "It's very hard, but it's very important. Yes, you feel bad now, but you're going to feel great when you're able to pay for the things you need."