Should you lend money?
Money makes
the world go round (though romantics would think it is love…but does love pay
the bills?) And since the world is full of dos and don'ts, it's no wonder that
when it comes to giving money there are a number of rules to be followed.
Here are a few basic tips to follow when you are
lending money.
1. Give it to a reliable
source
Everyone has a sob story and pretty much
anyone needs money for something or the other. The thing is to see whether
their reason for borrowing is genuine. You should also give the money to
someone you trust, and who you know won't try to swindle you.
2. Make repayment
options clear
From the start, you should have a repayment plan.
Make the options clear and also the time in which you want the money back. Sort
out these details before you give the loan, and it's best to make the deal
plain on paper.
3. Don't lend money if
you know you may lose it
Remember it's your hard-earned money that's going
out to someone else. So, unless you are certain it's for a good cause and you
are going to get it back, don't lend it.
4. Don't lend if you
know it will put you in debt
Sometimes, close friends or family members will
ask for a huge sum. But, it pays to say no if you don't have that kind of money
to spare. You don't want to fix someone else's money problems only to find out
you've now got some of your own.
5. Don't dip into
savings or retirement funds
This applies to older or retired people. If your
kids are going through a hard time, it's not easy to sit back and watch them
suffer. But, avoid dipping into your savings as this could leave you high and
dry later on. Urge them to see a financial advisor or, budget.
Remember, that lending money, especially to people
you don't know well is a big risk. Try to keep the amount fixed and don't let
them borrow over and above it. Make all the conditions clear beforehand too.
This way, you won't be fooled, or have any worries about your money coming back.
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