Why family, friends, money make a toxic mix

When someone you love is in serious need of cash and you have the means to help, it can be impossible to say ‘no’. But you could be in for a shock if you expect to be paid back

Jasmine Atieno @sparkleMine

We all know at least one person we have lent money to and it was never returned. 

In fact, if you did not lose the friendship or the money, then you probably lost both.

It goes without saying that friendship, family and money just don’t mix. One would compare it to oil and water. 

When it comes to lending money to family and friends, there is need for precaution.

Communication expert, Gilbert Nyang’or shares that this is one lesson he learnt the hard way.“I stopped lending money to friends since I am poor at asking back for it.

Plus it leads to broken friendship and trust, especially when the person does not give back your cash.

I would rather give and forget when I am in the position to help than loan and expect back.

And it also depends on whom and how much we are talking about,” says Nyang’or. 

Journalist and footballer Kevin Githuku shares that while it is easier for him to lend out money to friends, it is nearly impossible to do the same with family.

“With family, it is tricky because we are always with them. So, in case either they, or I don’t pay back, there would be too many awkward moments.

With family, I would say, don’t lend, but give them a boost when they need it. But with friends, I most of the time get my money back.

I try to promptly pay back when I am the one in the needy shoes,” shares the footballer. 

Psychologist Loyce Sigana agrees it is a tricky situation for several reasons, one of them being ghosted by people you know and maybe care about. “In most cases, you end up being the loser.

That’s why it’s imperative to establish the strengths of your relationships with the said people.

The second reason is because of the impact of broken promises on relationships.

As is the custom, if the relationship is not that strong, losing the money won’t hurt as much as someone you considered family or friend,” she says. 

Reasons for borrowing

She adds: “Then there are self- financial capabilities, where you can’t draw water from an empty glass.

Lending money when you can barely take care of yourself to me is unfathomable, and in most cases family never understands how you can have a job and not have money. In such situations, lending money is unacceptable.” 

And with social media creating a wider platform to connect with family and friends is almost impossible to rule out stalking and paranoia.

Can you count the number of times you have come across people whom you lent money to living their best lives on social media?

In as much as it may be make belief; no one wants to see such sights. It’s often viewed as disrespectful and inconsiderate.

99 per cent of the time you find yourself narrating the story to someone else, emphasising why lending money is not wise.

According to the expert, it is also vital to consider a family member’s lifestyle before even considering lending money out to them.

“Before lending out money, you need to ask and be certain of the situation one is in.

Sometimes, people loan money for reasons that are shallow, like buying something, or going somewhere with their friends. Having fun on a budget is normal.

However, if one finds self in the company of people who have more spending power, it’s advisable to take a step back and re-evaluate one’s priorities.

In such cases, saying ‘No’ is simpler. Lending money is an emotional rollercoaster and often comes back to you when you are broke - that one person whom you gave money to and failed to return haunts you more than your own insecurities.

Making peace with lost money or friendships is not easy; this is precisely why making the right financial choices is essential,” she advises. 

Can get away with it

Many economists and financial experts consider loans as a part of or a source of income hence when considering giving out of loans there are two major principles to be considered; how soon the money is to be returned and secondly the likeliness of the money being returned. 

And as economist Odhiambo Ramogi shares, when someone asks for a loan, they know they will have to pay come rain come sunshine.

So they are more likely to use this money carefully as compared to when they know they can get away with it. 

“Lending out money requires an enabling environment for enforcement if the loan isn’t paid back as agreed.

When lending money to friends and family, the environment is never that punitive and they know that they can easily get away with it or call for intervention of immediate family member.

Family and friends most of the time feel an entitlement to your resources because of the close relationship,” says Ramogi. 

The economist advices though that it is best to identify and interrogate, for instance a money making project that the loan is intended for, with involvement of financial institutions such as banks, and upon satisfaction, one can go ahead and give the loan. 

To ensure that your relationship remains unscathed and you benefit from the financial help, do not take big loans from family members.

Take only the amount you know you will be able to return with ease in a specified time frame.

It’s best to have a written agreement on the terms of loan, be it the amount, repayment schedule or time frame. This will impose an obligation on someone to repay the money.