Lending money to friends and family without losing the money or the friend
The problem with lending to someone close is not the money. It is that three months later the two of you remember different things.
In short
When you lend to someone close, record three things the same day: how much, to whom, and by when. The date is the part that prevents the conflict, because without one nobody is breaking anything and the matter quietly sours. If losing the amount would hurt you, do not lend it: either reduce it to something you could give away, or say no.
Almost everything written about this is about whether to lend at all. You settled that question before you started reading. What follows is the other thing: how to do it so that in six months the relationship is unchanged.
Why it goes wrong, and it is not the money
It goes wrong because of memory. Three weeks later one of you remembers "I will pay you back when I can" and the other remembers "I will pay you back soon", and both versions are sincere.
From then on neither can raise it without sounding like an accusation, because there is nothing concrete to point at. The silence grows, and what is lost is not the amount: it is the ease of the relationship.
3 figures
Recorded the same day
How much, to whom, and by when
1 date
The part that prevents conflict
With no date nobody is in breach, which is why it never gets discussed
1 question
Before saying yes
If losing this would hurt, it is not a loan
The thirty-second conversation
No contract and nothing solemn is needed. One sentence is, in the moment, while it is still easy to say:
"Sure, I will send it. Does end of May work for paying it back, or would two instalments be easier?"
That is all. You have set a date, offered an alternative, and not turned a favour into a negotiation. What matters is that you name the date at the start, because afterwards it cannot be said without sounding like a demand.
Write it down, even if you trust them
Writing it down is not distrust. It is the opposite: it takes off your memory a job it does badly, so you do not have to keep thinking about it.
There is a practical reason as well as a social one. If you lend two or three times a year, those amounts are part of your money: outside your account but still yours. A net worth that leaves them out is wrong in both directions, and that is in how to calculate your net worth.
How to ask for it back without drama
When there is a date, nothing needs asking: something needs reminding. And a reminder a few days ahead is a courtesy, not pressure.
If the date passes, the sentence that works best does not mention the past: "Hey, does closing the May thing this month suit you, or shall we leave it to next?" It offers a way out and assumes it will be settled, which is what makes it get settled.
Partial repayments count
Someone who returned half and went quiet is not someone who did not pay: they are someone who is halfway. Record each part as it arrives, because the outstanding balance is the only thing that needs knowing, and because watching it fall keeps the thing alive.
When it is better to give it
There is a test, and it is honest: if losing that amount would hurt you, it is not a loan you can make.
There are two dignified ways out. Lend a smaller amount, one you genuinely could lose without anything changing. Or say no, which is also an answer and usually does less damage than a loan that poisons a relationship for a year.
And if you decide to give it with no expectation, say so out loud: "this is a gift, do not pay me back." A declared gift creates neither a debt nor a silence. A loan that was a gift in your head creates both.
Common questions
- How do I ask for a loan back without upsetting them?
- By reminding rather than demanding, and by offering a way out: proposing to close it this month or next leaves the door open and assumes it will be settled. It is far easier if you named a date when you lent, because then you are not asking for anything new.
- Should anything be in writing between family?
- For ordinary amounts, recording it yourself and having said a date out loud is enough. For amounts that would change your year, a written message with the sum and the date, agreed by both, takes that job off anyone's memory.
- Does money owed to me count as part of my net worth?
- Yes, if you genuinely expect it back: it is outside your account but still yours. If you no longer expect it, it has stopped being an asset and is better removed from the calculation than kept as something that will not return.
Try it on your own money
Caudal is an expense tracker in Spanish, English and Russian. Several currencies, goals, debts, a shared household budget. Recording an expense takes three seconds.
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