Never borrow, never lend, if you want to win a friend.
“Money often costs too much.” Sometimes, sadly, that cost is friendship. Blame different value systems or different life experiences — whatever the cause, it happens. A lot.
We all have heard the warnings about the dangers of lending to or borrowing from friends. Don’t do it, we’re told. It only means trouble. You’ll end up regretting it. And yet.. Sometimes you want to help. Sometimes you feel compelled to help. Sometimes you just don’t know how to beg off without sounding like some kind of Scrooge. And so, you say ‘Yes.’
And then you discover that everybody was right: when money comes between friends, the biggest risk is that you stand to lose both.
Did you know that more than half of people have seen a friendship end because of no money owed? Let’s face it: lending money to friends seems like a simple way to help someone out, but it can quickly turn into a sticky situation. A simple loan can strain your relationship, lead to unfilled promises, and create an awkward imbalance of trust. Money and friendship are just like oil and water — they don’t mix well. (However, there is always an exception.)
Money can test the bonds of friendship, and stories abound about how lending or borrowing money can strain relationships. While some friendships endure even with financial transactions, others falter — highlighting the importance of trust, open communication, and financial responsibility.
The belief is that money can create a sense of obligation and expectation, potentially damaging the friendship if these obligations are not met. If you need some convincing, here are some reasons why lending money to friends or relatives is a bad idea:
Creates an imbalance in the relationship: Nearly a quarter of people who lent money or covered a group expense with the expectation of being paid back say doing so negatively impacted their relationship with the other party.
Loans between friends and even between relatives, create an imbalance in the relationship and put everyone involved in a clumsy position. Suddenly, you’re not just friends — you’re a lender, and they’re a borrower. This creates an unspoken power imbalance that can make both might start avoiding you out of guilt, or you might feel tempted to judge their spending habits
Even if the loan is repaid, the dynamic may never fully return to what it was before. Your friend may feel guilty for not fulfilling the obligation, while you could start feeling resentful or disappointed. Suddenly, every interaction feels overshadowed by that unpaid commitment rather than the bond you once shared.
Dare to rebuff a request for a loan — no matter how graciously you handle it — and you risk damaging the relationship. Agree to the loan and you risk possibly never seeing your money again, creating animosity, and resentment, and potentially destroying a friendship forever over money. Relatives are no different. In fact, saying “No” can be magnitudes more difficult — as can getting your money back. The end result? A Total Lose-Lose: No Money, No Friend.
You might not get paid back: This one’s harsh but true. Loans between friends often go unpaid. Your friend might genuinely intend to pay you back but struggle to follow through. Life is predictable, and without a formal obligation, repaying a friend can quickly fall to the bottom of their priority list. You’re then left in an awkward position — do you keep reminding them or just let it go?
Rife with sticky Issues: Lending money to friends, or borrowing from them, is rife with all sorts of sticky issues both sides often are loath to confront. Should you, the lender, charge interest? And if so, at what rate? Should you, the borrower, offer to pay interest to save your friend the awkwardness of having to suggest it?
Where should the lender rank among the borrower’s list of creditors? And how do you, the lender, bring up the topic of repayment when the payback has been slow in coming? Most loans to friends and relatives have a very low or non-existent interest rate. So, by loaning a loved one money, you’re taking on a ton of risk for a fraction of the payout a bank would normally get.
It’s hard to set clear terms without feeling awkward: When you lend money, it’s important to have a clear agreement on how and when it will be paid back. But let’s be honest: discussing terms with a friend is awkward. You might feel strange asking for a written agreement or setting deadlines for repayment and your friend might assume that because you’re close, they can take time paying you back. Without formal structure, it’s easy for misunderstandings or unspoken expectations to arise.
Having to repeatedly ask for overdue payments will get uncomfortable: There’s probably going to be a point where your friend or relative falls behind on payments. When that happens, it’s up to you to follow up with them about their late payment. And that conversation is going to be incredibly awkward. Unfortunately, it gets worse. They’re likely going to keep falling behind on payments. And you’re going to have to keep following up with them each time to let them know they’re late.
Lending money puts you at financial risk: Even if you want to help, there’s always a risk that your friend won’t be able to pay you back. Emergencies or poor financial habits can get in the way of repayment. Lending money can leave you in a tough spot financially, especially if you end up needing the cash back sooner than expected. Unexpected emergencies and job losses happen. And when they do, you’ll need extra money to pay your bills and stay afloat.
In such situations, you’ll want your money back as early as possible. Draining your savings to hep out a friend could leave you in the same position as them in the near future. It’s not just about the money — it can also chip away at the trust you have in your friend.
So, what’s the answer? How do you say ‘No’ when someone asks to borrow money, without jeopardizing your relationship? Setting boundaries is essential, and it can be done in a way that maintains respect and trust.
Here are a few ways to navigate these delicate conversations effectively while still preserving your relationships:
Be honest yet compassionate. When a relative or friend asks for money, it is tempting to either say ‘Yes’ immediately to avoid confrontation or to make up an excuse to get out of it. Instead, be honest but compassionate in your response. Acknowledge their situation and express empathy, but clearly explain why you may not be able to lend them money. Steer clear if your friend has a problematic past with money — who, in fact, is in a hot financial mess with a pattern of chronic financial management. It’s not about being selfish; it’s about being realistic.
Set a clear no-lending policy. Sometimes the easiest way to avoid repeated requests for loans is by setting a firm boundary in advance. Let people know that, as a rule, you do not lend money to friends or relatives because it can complicate relationships. You are framing it as a general principle that applies to everyone, not a specific ‘No’ aimed at the person asking.
Offer support in non-monetary ways. If your friend needs help, brainstorm practical solutions together. Whether it’s helping them find a side hustle or simply being there emotionally, you can still help without putting your friendship at risk. Encourage your friend to explore alternatives but avoid putting yourself in the uncomfortable role of the lender. You’ll protect your friendship and your wallet.
Delay your response. Sometimes it is difficult to say ‘No’ on the spot, especially when you feel pressured. In these cases, it can be helpful to delay your response. A simple “Let me think about it and get back to you” gives you time to consider the request to make a more thoughtful decision.
Decide on a small limit. 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. This shows that you still care, but you are also managing expectations to protect your finances and the relationship.
Set a deadline. When you ask for money back, it’s important to set a deadline for repayment. If there is no deadline, the borrower may be tempted to put off repayment or may not ever be able to pay you back. Be direct and honest. Don’t beat around the bush. Tell your friend you need the money back. Be understanding. If your friend struggles to repay you, offer to work to give them some extra time.
Consider giving money as a gift than a loan. If someone is generally responsible and has a full-time job but suddenly faces catastrophe a – a medical emergency, a burned-down house, or something similar — and they need support, just give them the money, with no expectation that they pay you back. Give them what you can afford as a gift, and if they pay you back, then that’s a bonus. That way, there are no terms or strings attached. Emotionally and mentally, it’s cheaper.
Saying ‘No’ to a friend or relative who asks for a loan can be stressful and awkward. Yet sometimes ‘No ‘ is the best answer, and the one you should give to protect your financial well-being, peace of mind, and the relationship as well.
Bottom Line: Remember, True Friendship is about being there for each other — No Strings Attached.
