We all have the best of intentions when it comes to our families. We’re often willing to offer money to help each other out in situations when we would never do it for a stranger. But this also means that when we accept financial help from a family member, the rules can be very different than when we borrow money from a bank or some other impersonal lending institution. The potential for problems resulting from a loan or a gift are very different when we’re dealing with family — to the point that it’s often better to just refuse the generosity even it seems like the easiest choice. Here are five scenarios where it’s probably better to politely say no.
- Refuse the money if it isn’t clear whether it’s a loan or a gift. Any time that the nature of the money being offered could be misunderstood, it probably will be. Due to the way many families interact, a relative who wants to make a loan may not discuss repayment or interest in an effort not to worry the borrower. But let’s face it, most people will eventually need the money back. Avoiding a misunderstanding with family is generally more important than getting an interest-free loan.
- Refuse the money if there are strings attached. Since many family members want what’s best for you, some may be willing to do whatever it takes to get you to go along with their version of what’s best. Offering money with the understanding that you’ll follow their ‘suggestions’ is just one strategy, and, even if you pay back the money immediately, those strings may last for years.
- Refuse the money if your relative can’t afford to offer the sum. Family members do things out of love and have been known to take that to an extreme, offering up more money than they truly can afford to. No one ever wants to put a relative in a bad financial situation. It can be tough to tell the truth of the matter, but make sure that if you’re borrowing money from a family member, it won’t eventually cause issues for them.
- Refuse the money if repayment won’t be an option. While money may be offered as a gift between family members, it’s especially critical that — if it is offered as a loan — you are sure you’ll be able to repay it without a problem. Just in case circumstances change, it’s generally best to try to put yourself in a position where you can repay gifts or help your family out yourself in return.
- Refuse the money if there’s any potential for a problem. You probably won’t ever see your lender at your bank in person after taking out a loan, but you’ll see your relatives at the holidays, at birthday parties and plenty of other occasions. Avoiding problems is usually worth going outside your family for financial help.
There are situations in which money matters among family members are routine. But it’s always important to remember the value of your family isn’t a question of dollar signs.
Dealing with money matters amongst family members is complicated whenever the amount is significant enough for the parties involved. Avoid it like a plague if at all possible. If you really need help, make sure both sides understand the exact terms and how it will be repaid. Laying out all the facts at the beginning may sound like it’s breaking the family bond, but not understanding all the facts will for sure create tension later on.