According to the Census Bureau, 25.6 million people borrowed from friends and family this year, up from 19.1 million a year ago.
So here’s the question: If a friend or family member came to you for money, would you give it to them?
It’s been an issue for hundreds of years. Take this line from Shakespeare’s “Hamlet” for example: “Neither a borrower nor a lender be; for loan oft loses both itself and friend.”
And it’s true. A Bankrate survey found that nearly half of those who lend to friends and family say it doesn’t end well.
So, when you’re approached or are about to approach, what’s the right way to do it? That’s what we’re going to talk about today.
Remember, even though we sometimes talk about specific investments on this show, don’t take them as recommendations because they’re not. Before investing in anything, do your own research, and make your own decisions.
You can watch this episode below, or if you’d prefer to listen, you can do that with the player at the top of this article, or download it wherever you get your podcasts:
Should you lend money to family and friends?
We all want to help out. But does it make sense to lend money to family and friends?
- Before any talk of lending comes up, you should be speaking to your family about money. Here’s why you should be talking about money.
- Stacy takes you through what you should say when family and friends ask for money. Check out this YouTube video.
- You might need to borrow, and that’s never fun. But borrowing from family or friends can make more sense than many other terrible ways to borrow money.
- Don’t forget that there are some types of loans that are much worse and costlier than borrowing from family and friends.
- Lend money to your kids? Stacy tackles the thorny issue of making loans to your children.
How to handle loans to family and friends
Looking for guidance on how to handle these situations? Here’s what you need to know before you move forward with a friends and family loan.
- Want to lend money anyway? Here’s how to lend money to your loved ones — the right way.
- If you decide you need help by borrowing, here’s how to borrow money and reduce the chances of relationship strain.
- Does someone owe you money? Here are some tips on how to collect debts from other people.
- Want to help your kids? You can help your children without breaking the bank.
- Check out these true stories of lending money to family and friends.
Meet this week’s guest, Lynnette Khalfani-Cox
Lynnette Khalfani-Cox, The Money Coach, is a personal finance expert, speaker and author of 15 money management books, including the New York Times bestseller “Zero Debt: The Ultimate Guide to Financial Freedom.”
Lynnette has been seen on more than 1,000 TV segments nationwide, including appearances on Oprah, Dr. Phil, The Dr. Oz Show, The Steve Harvey Show, Good Morning America, The TODAY Show and many more.
A former financial news journalist for The Wall Street Journal and CNBC, Lynnette is the CEO of TheMoneyCoach.net LLC, a financial education company that she runs with her husband and co-founder, Earl Cox.
Lynnette earned her bachelor of arts degree in English from the University of California, Irvine. She also holds a master of arts degree in broadcast journalism from the University of Southern California. She is a native of Los Angeles who spent 20 years on the East Coast, but now lives in the greater Houston area.
Lynnette and Earl are the proud parents of three children – including one recent college graduate, one current college student and one college-bound teenager.
To learn more about Lynnette, stop by her personal site, LynnetteKhalfaniCox.com; visit her financial advice blog, AskTheMoneyCoach.com; check out her video-based financial courses at MoneyCoachUniversity.com; or connect with Lynnette on social media via LinkedIn, Twitter, Facebook, Instagram and YouTube.
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About the hosts
Stacy Johnson founded Money Talks News in 1991. He’s a CPA, and has also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
Miranda Marquit, MBA, is a financial expert, writer and speaker. She’s been covering personal finance and investing topics for almost 20 years. When not writing and podcasting, she enjoys travel, reading and the outdoors.