Loaning money to family members

Life was a lot easier when I was a student and my only responsibilities were to pay for school and study. Once I finished school and got a job, my financial responsibilities exploded: I now have to consider a mortgage and all those other house-related expenses (water, gas, electricity, condo fees, insurance), car payments and car insurance, cable, internet…you get the point. It’s never a problem to find something to spend money on!

Over two years ago I shared how like many abroad, my parents were helping their family back home. I mentioned that in comparison to my parents I hadn’t really done much. Since then I’ve had the opportunity to help family members but in two cases it hasn’t quite worked out the way I thought it would.

I loaned a sum of money to a cousin who was preparing to go to the UK for school. The amount I loaned him was small in comparison to the total amount he needed, but for me it was a significant amount. My cousin insisted it was a loan and I had no reason to think otherwise. However, we never discussed exactly when the repayment would commence and it has been nearly two years. Last year he was selling a game console (Xbox or something similar) on Facebook and I told him I knew where he could send the profit (meaning he could send it to me). He asked me what I meant and I told him he knew. The conversation was playful and casual, but I said it to remind him of the outstanding debt. It didn’t work. To add some spice to the story, I can no longer see him or his wife on Facebook, but maybe that’s because they no longer use Facebook.

The second loan was to a female cousin, one that I am quite close to. Of all my cousins on that side of the family, she’s the only one I would would loan money to because I believed she would definitely pay me back. Her need was urgent and her reason for needing the money sounded legitimate to me. She said it was a loan and told me when she would pay me back (in a matter of weeks). When that time came and went, she apologized for the delay. But now it’s been a year and I haven’t heard from her concerning the loan.

I’ve heard that you should never loan money that you can’t live without, meaning you should set your expectations low and assume you will not be seeing the money again. I did think I would get the money back but I’m so thankful that my life has not been inconvenienced as a result of not having that money–I’m truly blessed! For me the sad part is not that I haven’t gotten the money back but that neither cousin thought to let me know that it wasn’t a loan or that they would not be able to pay me back after all as planned.

I don’t think I’ll ever loan money again. Instead, if I decide to help out a family member I will gift them with the money. That way, the expectation of repayment is removed, and everyone will be able to sleep well at night.

Do you have a money-loaning philosophy? (For many that policy is “Don’t”!)

13 thoughts on “Loaning money to family members

  1. I never loan money because it always ends in tears
    Instead, if someone asks me for money…I give them an amount I can afford to live without.
    I'm sure you've heard the saying….'Neither a borrower or lender be' ?
    It's not just worth the grief

  2. Ah well, my motto is, never lend money you cannot afford to give out. It is a hard rule to live by because people will come with all sorts of hardships and it is difficult to say no.

    I hope you get your money back.

  3. I only loan out money I can live without because I cannot shout.
    When they come begging, you will the evil witch if you cannot help them…payback will turn to wahala.

  4. Very true only give out what u can afford to do without.family members never pay back loans neither do some friends especially someone you are in a relationship with they conveniently forget but the good thing is that hey cannot come back to ask for another loan except the very shameless ones.

  5. My experiences in the past couple of years have taught me that there tends to be a very VERY different view of the exchange of money between family members in Canada and in Nigeria. It has taken some getting used to for me. I do agree that if you lend money, you should give it knowing that you may not get it back. It prevents a whole lot of stress for you in the long run.

  6. After some experiences with friends in boarding school, I decided quite early on to only gift people with money if they ask for a loan. It saves me a lot of stress and often helps to save relationships.

  7. Myne makes a good point about 'saving relationships'. I went against my policy and borrowed money from family. it hangs like an albatross around my neck but one thing i do know…its going to be paid back.

  8. Bump that men……i prefer to just give people the money if i have it and forget that the money existed because it starts making me bitter when they do not keep their word. That is the part that ticks me off.

  9. Lovely blog layout!
    I loan very few people money – i'm sure they'll pay back and so far I've never been disappointed.
    but I've also had to restrict the circle to just 1 or 2 people cos of horrid experiences…As I rule, I never borrow money….

  10. Next time a friend or relative ask you for a loan tell them to fill out a loan application and have it sent to your email.
    let them include a repayment date, their account number and also let them voluntarily include penalties for not paying on time, am sure that is enough deterrence.

  11. only loan out what you can afford to live without or like you said gift them my cousin recently asked me for a loan and since i didn't have the amount she was asking for i thought about asking a friend of mine since she is one of my fav cousins i really wanted to help…but then i thought to myself what if she does not pay then am stuck with this debt so i gifted her what i could afford and she had to look for the rest elsewhere…

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