8 Shocking Reasons Why You Should NOT Borrow Money from Friends & Family


It was Polonius, Shakespeare’s chief counselor to King Claudius in Hamlet that said, “Neither a borrower nor a lender be.” This advice still rings true today when it comes to borrowing money, especially from family and friends.

Why shouldn’t we borrow money to friends and family? Because as Polonius answers, “For loan oft loses both itself and friend.” A loan between a friend or family member often results in the loss of both the money and the relationship. To many times today we see new stories about how this situation could even become life threatening.

Borrowing between family members or friends can result in an entirely unexpected set of issues. We have put together 8 reasons not to borrow money from friends and family.

1. Tend to be Open-ended Loans

Loans to family and friends end up being “open-ended”. This is because the folks involved don’t reach an agreement for a timeline for repayments. Because of this the lenders don’t know when their money will be returned, and borrowers don’t know when to repay the loans so misunderstandings ensue and before you know it everybody is mad at everybody else. Both parties are in limbo, and this situation doesn’t set any expectations. The uncertainty can lead to stress.

2. Loans tend not to be a Priority

If a loan between family and friends is an open-ended loan, the borrower may not realize that there is a sense of urgency to repay the loan when that is what the lender is expecting. Without a deadline, repaying the loan becomes a last priority when it comes to paying bills. Many times because the lender is a family member or friend there is an expectation that there is some leeway in terms of repayment when, in fact, there is now; this leads to hard feelings.

3. Asking for the Money Back is Awkward

Let’s be honest….no one likes asking for money back; it’s awkward and uncomfortable. It can be difficult to request repayment of a loan especially from a friend or family member. When you care about the borrower you don’t want the borrower to feel awkward and as the borrower you may not realize this. Sometimes this situation will shut down communications with everyone avoiding talking about the loan altogether. Confused and hurt feelings can result.

4. Family Gatherings become Uncomfortable

Borrowing from a family member means that if you don’t pay that loan back it can make for some really uncomfortable family gatherings. Family get-togethers become a place where folks are avoiding each other because of resentments regarding the loan. It can also be uncomfortable to be around other family members who know about the loans.

5. Enabling Instead of Helping

When you borrow money from friends or family members, they are giving you an easy way out and this can lead to a constant situation where those who were trying to help you just keep allowing you to get into trouble making it possible for you to ask for their help again and again. One thing that the interest on a loan does is encourage people to not want to be in a situation where they have to borrow…it costs you money.

6. You May Become a bit of a Pest

Let’s be honest…lend someone money, make it easy for them and they will come back for more…even with the best of intentions….don’t become that guy. Many family members or well-meaning friends try to “help out” but what they end up doing is creating a situation where they are looked to as the “money tree” and this can lead to serious resentment. Let’s be honest once a person has loaned you money it makes it that much easier to ask again. It’s best not to start this practice in the first place.

7. The Person you Borrowed from Might Need the Money

What happens if you borrow money from a family member or a friend and suddenly they are hit with an emergency situation? They will definitely want their money returned, but they can’t very well force the return without hurting your feelings. What if they lose their job and have no income? What if they need to put food on the table for their kids? Not receiving repayment of the loan in a timely manner might make all the difference in the world to them and their family and if the loan can’t be paid back….well….there goes the relationship and you will feel horrible.

8. You Could Lose Your Money and the Relationship

Guilt, remorse, and anger…these are all byproducts of borrowing money from family or friends. Even the best of intentions can go south very quickly in this type of situation. The best advice anyone can give you here is, don’t go there in the first place. Obtaining a personal loan just may be a better option. Sure it will cost you a little interest but in the long run, better a little bit of interest instead of a relationship with a longtime friend or a family member.

It is understandable that you want to be a good person, and you want your friend or family member to be okay financially but what is best for everyone is if you just gently refuse to borrow, and instead ask for help finding loan alternatives such as a short term or payday loan. In the long run it is best to save that relationship.

What other reasons do you think it’s worth mentioning here? Please comment below.

One thought on “8 Shocking Reasons Why You Should NOT Borrow Money from Friends & Family”

  • Asking someone for their money because you haven’t managed your own very well tells them a lot about you:

    1. It tells them you’ve made assumptions that they have more than you do. Maybe they do, maybe they don’t… that’s not for you to assume.

    2. It tells them you’ve assumed they don’t need what they have. When someone has a higher or more stable income than you do it’s a pretty fair bet that they have more debt and responsibility than you do, too. That’s because when we grow up, we learn that we can’t have things without paying for them. So if we want a house or a car or a family we have to work a job or a business that will pay enough money for us to make mortgage payments and car payments and buy diapers and put food on the table and pay utility bills and real estate taxes. And to get that kind of a job we have to get an education. And to get an education we have to pay tuition, so we often rack up a lot of debt before getting that job that pays a higher and more stable income. So there’s no money that isn’t needed. All the money for the next 20 years is earmarked.

    3. It tells them that you haven’t really grown up in your head yet, because you really don’t understand all that stuff we just went over in item 2.

    4. It tells them you have no respect for how hard they have worked for these things that they have that they probably still owe the bank for. There’s only one way you wouldn’t have respect for that, and that is because you have probably never worked hard for the privilege of going into debt to make the life you want to have. You just take the money from someone else.

    5. It tells them that regardless of all these previous points, you think YOUR need or want is more important to you than THEIR needs and wants are to them.

    6. It tells them your need or want is more important to you than your relationship with them, because you are willing to deprive them of something they have worked hard for so that you can have something you are not willing to work hard for.

    7. It tells them that they are a “source” to you, and nothing more. But this usually doesn’t occur to them right away. You can probably weasel 3 or 4 unpaid loans out of them – more if you spread it out such that they forget – before they realize what a patsy they have been and shut it down.

    I have watched someone take money from his family and not repay it. Many times. And his family members are not wealthy; some are mortgaged to the hilt and others struggle to get by each month. He said to me the money was obviously more important to them than HE is, because they don’t take his phone calls now. Fact: the money was more important to this borrower than his family was. Once your family realizes this and accepts this fact, they find that life has much less heartache if they maintain distance from loved ones who just use them. It’s very sad. But the person in the wrong is the BORROWER.

    It is never wrong to keep and use and spend your money in the way that you have planned. You worked hard for it. Anyone who makes you feel guilty about not giving it away – not giving it to them – is someone to distance yourself from. And while charity is a good thing, it should be for AFTER you have met the goals you worked hard toward. And then it should be for a cause you get enjoyment from, and something that lightens your heart, not makes it ache. There are better ways to help people than handing them money.

    Dear Borrower, take responsibility for yourself.

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