Financial Etiquette: What to Do if a Friend or Relative Asks For Money [VIDEO]

It was William Shakespeare who wrote, “Neither a borrower nor a lender be; For loan oft lose both itself and friend.” While few people would argue with the wisdom of The Bard, turning down a relative in need or an enticing business venture from a friend can be difficult.

So what do you do? In this week’s episode of “Financial Etiquette with Randy Cohen,” the author, humorist and original The New York Times “Ethicist” offers his advice.

“Financial Etiquette with Randy Cohen” has caught the attention of publications like The Wall Street JournalThe New York Observer, and The Salt Lake Tribune. For more tips from Randy Cohen and Ally Bank, click here, or visit us on Facebook or YouTube.

What’s your policy for loaning money to friends or relatives? If you decide to do so, what precautions do you take?

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  1. 2
    Dennis Gurion

    I always get an agreement in writing on when I can expect to be paid back. Depending on the situation and relationship, I can be flexible. Although to previous comment, never loan out what you cannot afford to.

  2. 5

    A friend of mine’s Husband borrowed $2K from my Husband. It took him 1yr+ to pay it back to my Husband. About a year after that, my friend asked me for $2K to help her Husband’s business with the promise of paying it back within 2 weeks. Of course my head was screaming “no way” but I felt sorry for my friend and went ahead. I actually said that I wouldn’t need the money back for 6 weeks (giving them extra time). Well 5 weeks later (after hearing nothing from them) I reminded them that I needed the money back and we had agreed on 6 weeks. Long story short, I was “the bad guy” because I wanted the money back…they actually said that I was “being a jerk” because I was asking them to honor their commitment to pay back the money. I never freaked out, all I did was to say that they made an agreement with me and were not honoring that agreement. Net net, either give the money as a gift or say NO. Nothing good comes from loaning money. We still speak on occasion but we are no longer “friends”.

  3. 6

    loaning money to a friend or a relative is like trying to create a free grudge and more enemies because they in most cases make you look like the one that had been hiding their money.

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