Never Loan Money To Friends and Family

by Derek Clark

Give it to them if you can, or don’t do it. It isn’t worth ruining your relationship. I just read a very sad story over at Ultimate Money Blog about loaning a friend money. They needed the money, so she gave it to them. Now after months of saying they would pay it back and then avoiding them and not following through the friendship has mostly been ruined.

It is a terrible situation to be put in, but if a friend or family member asks you for money you have to either say no, or be prepared to give it to them as a gift. Most people have enough pride that this is a last resort, if they are coming to you for money they don’t have any other options. What that means is they most likely won’t be able to pay you back. If you have the money and you really think they need it, give them the money. But don’t expect it back. If you do the relationship will almost certainly suffer.

Proverbs 22:7 – The rich rule over the poor, and the borrower is servant to the lender.


This is a very important verse in Proverbs. It is one of my favorite. Many times it is used in the context of not going into debt. I have a post along those lines planned in fact. But here it is just as relevant, and maybe even more important. The borrower is servant to the lender. Your relationship changes when you become the lender and your friend is the borrower. Some translations use slave instead of servant to show an even stronger relationship.

When you have a loan between you every conversation includes talk of it, even if things are going ok. “I get paid next Thursday and then I’ll get the payment on the weekend.” “I don’t have it today but I’ll get it to you this Friday, I promise.” You don’t want your friendship to turn into the relationship you have with your banker.

When loaning / giving money to friends or family, there is also a fine line between helping and enabling. Is this the first time it has happened and is because of an extraordinary circumstance? Or is this the eighth time and because he can’t hold a job for more than 2 months. In the first situation giving the money could maybe be considered, in the second it almost certainly should not.

If it can be avoided, don’t do it. If you have the money and you want to or think you should help, go ahead and help. Do it as a gift though, and don’t expect to get the money back. If you need the money back, you shouldn’t give it to them. Your relationship is too important.

{ 36 comments… read them below or add one }

BibleDebt March 29, 2010 at 10:28 am

Excellent summary of this concept. I agree with your recommendation 100%. It is so easy to ruin a relationship by loaning money to someone. Give if you want and have it or don’t give.

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Derek Clark March 29, 2010 at 10:51 am

Thanks BibleDebt. It is always such a hard situation to be put in, and at the time you think you’ll ruin the relationship if you don’t loan it. It can be hard to see that more damage will be done by loaning money than not.

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myfinancialobjectives March 29, 2010 at 1:32 pm

I see you point in this article, though lending money to friends has it’s purpose. Lunch for example… I’ll pay today, you pay tomorrow. A dollar for the vending machine….Three days later, you give me back a buck… I have been lending and recievign money from friends since middle school, all without any problems that I can remember. I recently loaned three of my friends money, totaling $2000. They all paid me back, and we reserved a very nice price on a vacation together because of it. I knew all of them had a good situation in which they would be able to pay me back, and they did. If I had not done this, and assuming they had no other options, the vacation would have costed around $400 more. Like BibleDebt said, I wanted to help my friends, and I could, so I did. And I guess this has been the same throughout the rest of my life. I guess maybe I just “know how to lend”?

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Derek Clark March 29, 2010 at 2:28 pm

I’m not concerned about buying lunch, that is a case of not having cash in my wallet. It is not a case of not having cash period. The amount of money involved in paying for lunch is also not really what I’m talking about. This is something that I do with my friends all the time, and if we lose track of it it just doesn’t matter.

From the way you said it, it sounds like the vacation was more along the lines of I’ll book the trip and then you guys pay me as opposed to really being a “loan.” Were you actually lending them money to go on vacation?

I’m talking about the situation where John Doe friend doesn’t have money, can’t hold a steady job, but needs money “just this one time” to make the rent this month.

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Joe Plemon March 29, 2010 at 8:24 pm

Well done Derek,
You set the tone with your first sentence: “Give it to them if you can, or don’t do it.” If we think the person is really trying, but is just short of money, my wife and I will give money to that person, sometimes anonymously. But we don’t loan. Like you said, it changes the relationship to “Master-servant”, and if we can afford to lend the money, we can afford to give it. Giving is better.

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Derek Clark March 29, 2010 at 8:59 pm

Thanks Joe. I completely agree. Changing the relationship simply isn’t worth it. Helping is wonderful, as long as it doesn’t cross the line into enabling.

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youngandthrifty March 29, 2010 at 11:06 pm

Hey Derek,

Yeah, although the gesture is a nice gesture, if it’s a large sum that you already feel uncomfortable parting with, it will only create resentment within the relationship… =(

I have a friend who repeatedly lends her money out and gets burned when people don’t return it! =(

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Mrs. Money March 30, 2010 at 12:41 pm

I agree with you 100%. I will never lend someone money like that again. It sucks because I have known them for 8 years and then they go and do something like this. And now I may have to take them to small claims court. 🙁

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Derek Clark March 30, 2010 at 5:21 pm

I’m really sorry about your relationship Mrs. Money. It’s too bad that your friend put you in that situation

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Peter March 31, 2010 at 2:33 pm

I completely agree, don’t lend money to friends and family, and don’t co-sign on a loan either! It will just create problems down the road -and even if they pay you back it will change the relationship – even if for a while.

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Derek Clark March 31, 2010 at 8:43 pm

Yeah it definitely changes the relationship. Co-signing is similar, but probably even worse. Not only does it stress the relationship, when they default you lose the money and hurt your credit score (if you care about that).

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Financial Samurai April 4, 2010 at 8:57 am

It’s a tough one Derek. I generally will lend money to my closest friends or family, and mentally just write it off, expecting them never to pay it back, or pay some of it back a looong time from now. If lenders can do that, then things will be OK.

Best, Sam

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Derek Clark April 4, 2010 at 5:15 pm

Thanks Sam, yeah I agree. You have to be completely willing to part with it and basically think of it as a gift. If it is a loan there will almost certainly be problems.

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Guy G. April 21, 2010 at 9:58 pm

Hey Derek,
My grandfather would never lend money to friends either. When people asked him if he could co-sign, he’d tell them that he wouldn’t even do it for his children. He was very generous though, and if he believed in someone enough who was ambitious and who had a great idea, he’d give them the money for it or help them out in any other way he could.
Also, even if you don’t care if the person pays you back or not, if they feel they should pay you back but can’t, then they’ll just feel guilty. That guilt will eat them up and that’s hard on the relationship as well.

Anyway, Thanks for sharing,
Guy

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L. Wright April 23, 2010 at 6:58 pm

I’m really struggling with this. I am a sort-of-single-mother, as my daughter is now twenty, but needs help as she tries to follow God’s will. I am working a low income job, and we both are starting out again with nothing after escaping an abusive family member after twenty years of patience. In my new town and job, I lent money to two co-workers in an effort to “be a good witness”. Both were dealing with extenuating circumstances, but one I now know has a reputation for stealing etc. One was lent $260.00, and “the scam artist” was lent $120.00 for a vet appointment for her now dead cat. This, after I had been what I felt was defrauded for $5,000.00 by a white collar worker in another country. I essentially lent money I didn’t have as I helped them by credit card and am now paying interest on their loans. I felt justified in requesting that I finally be paid after waiting six months, as I am moving to a new town to attend a Nursing program. Then recently, after (finally) finishing the Old Testament, I was reminded of Matthew 5:42…”give to him who asks you, and from him who wants to borrow from you, do not turn away”… So, given that I have massive Student Loan Debt, and technically, don’t have money to lend, am I supposed to just let people keep essentially robbing me? I’m sure there’s scripture or information that will shed light on this, but I can’t seem to find it. I’ve been really struggling with this as I work beside the scam artist that has the attitude of “there’s nothing you can do about it”. In the meantime, I haven’t had money to lend to my daughter, Christmas was practically non-existent, and I have been living off the food left in the hotel check-out rooms that we clean. I know God will provide, (and He has) but I am also certain there is more to be understood about this scripture. My daughter and I are essentially alone in the world with no support network other than God. Even the church I attend is essentially dead. I want to be a good witness to my co-workers, but at this point, I think I’m just seen as “a fool who needed to learn a lesson”. The social culture here is VERY hostile and critical (and racist). If anyone could PLEASE offer any scriptural insight I would be very VERY grateful!
Thank you so much for any help you can offer.

=0]

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Jerry January 31, 2011 at 8:53 am

You really should just let god take care of them. If you really believe in him so much then just pray for him to help them and that should yake care of it. If the problem is big enough he will step in and help someway so that it won’t come out of your pocket. JMO.

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r0ckcandygirl December 16, 2014 at 9:15 am

To L. Wright: I had a friend who wanted me to buy him stuff and used that very same Scripture on me. I turned the tables around and I told him that I needed someone to clean my house and mow my lawn. I told him that he needed to give to everyone who asked of him, and that included me. I reminded him of the very same Scripture he used on me. I told him that he has to work for me, and then I will buy him stuff. So he told me that he thought that it wasn’t worth it and that he didn’t want to work for me. He told me he’d find someone else to ask cause he just didn’t like to work. Switch gears and remind the people that you need help first. Tell them if you work for me, then I’ll give you money. They generally won’t want to work for you and will find someone else to mooch off of. The bible says the man that doesn’t work, doesn’t eat. 2Thessalonians 3:10 If you need help yourself, and really don’t have much money then put them to work, and remind them that they need to give to everyone who asks them. Then you go ask them for help first. Tell them, “if they help you first, then you will help them. But if they won’t help you first, then you won’t help them either.” Why would they try to burden you down and not lift a finger to help you? But they want you to help them? Chances are they won’t bother. But if they are seriously in need, they just might take you up on it. I only had one person take me up on the offer, and they had to work really hard to get a lunch and whatever else I promised them. But they helped me with my business, and I greatly appreciated their help. They helped me first to make money. Everyone else just decided it wasn’t worth the hassle. 🙂

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Arthur @ financialBondage April 26, 2010 at 8:11 am

never loan money to friends or family. giving them money is fine. never cosign either. thats another bad idea. it’s best to never get involved financially in anything with friends or family. My brother sells insurance and I wont even buy insurance products from him. I use too. not any more. lesson learned

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FinancialBondage April 27, 2010 at 3:59 pm

L. Wright,

I commend you for wanting to help people out. that is a good christian thing to do. But being a christian does not mean being a door mat for others either, letting people take advantage of you. You are a single mom without much money, I would encourage you to give to the church, but lending money to friends family and coworkers is a bad idea. With a low paying job you need that money for yourself and paying your bills. If you want to give someone money to help them out that is fine.

Your church is dead? Not sure what that means. Not many people there?

God bless you for wanting to help others, but don’t let people take advantage of you. 🙂

Hope this helps some.

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Alex Burda April 30, 2010 at 6:47 am

HI…I thing every one to save their relation ships but in a good way you want to help the other people its good thing we should never involved financially with our relation ship so i think good sit to understand good and bad points keep it up.

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Jackie May 2, 2010 at 12:51 pm

I agree with the “either give it to them or don’t do it sentiment”. Most times people who desperately need money desperately need it because they aren’t good money managers. Which means that you’re highly unlikely to be repaid, despite what you may want to believe, and you can kiss your good relationship with the person goodbye.

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M.Y. November 15, 2010 at 11:30 pm

It is a beautiful thing to do- to help your loved ones when they need it. But it doesn’t mean anyone should take advantage of your good heart and as well as your hard-earned & hard-saved money. I personally would lend money for someone’s emergency use- but I do expect money back if I know they can afford to pay back at certain time. If I lost a relationship by asking back for my money (or lost both- relationship and money), then it opens my eyes rather I should value such relationship.

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Dorothy July 3, 2011 at 1:55 pm

My “best” friend of 16 yrs borrowed $750 from me. First, she was short on rent and borrowed $450. Then she had a wreck and needed to borrow $300 more. I did it because I am the godparent of her children. This situation has ruined our friendship. I believe she used me for all of these years and named me godparent because she figured I would come through financially. I have learned my lesson. I will continue to be in the lives of the children, but she and I will never be the same.

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Dana July 10, 2011 at 3:20 am

Yeah, you are right. It is better to not give the money than lend the money to friends or families. I have seen many friends and families become apart because fight over the loan.

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Grace May 19, 2012 at 1:53 am

Hi guys,

I agree with what some of you guys are saying. Although it does remind me of something someone told me.
If we believe God has blessed us to a point where even though we might save to buy that pair of “something” we want, we essentially have food and shelter and all the other important stuff, why should we not help someone else out? Even if they didn’t pay you back last time. I know some people will say NO and don’t want to be doormats but to me that sort of reminds me of our relationship with God.
He is the one who holds all the grace and mercy and imagine if as someone who had done something detestable in his sight. You then went to ask him for his mercy and grace and he simply said NO. “I don’t want to end up in a situation where you sin again and come back to ask for the same thing!”
Our lives should be about embracing God and everything that comes with him and that means mirroring the relationship he has with us into other people. I’m sure all of us go back to him again and again to ask for something and it would be very very disappointing if he said no every time we did.
:]

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r0ckcandygirl December 16, 2014 at 9:35 am

If we believe God has blessed us to a point where even though we might save to buy that pair of “something” we want, we essentially have food and shelter and all the other important stuff, why should we not help someone else out? Even if they didn’t pay you back last time.

Here is the reason why I don’t want to turn in to an enabler to certain friends. I have two friends who take in over 2 grand a month from social security disability. They always seem to come up short almost every month on cash. They live rent-free. But they are substance abusers. They won’t tell me, but my family and I are certain they are abusing alcohol. In fact, a good friend called me and assured me that she went over there and drank a large amount of alcohol with them. She assured me they were alcoholics like herself. She wouldn’t lie about that. My mother also went over there and she assured me that my one friend was drinking in the morning. She has a lot of experience with detecting alcoholics because her husband, who has passed on (died) from alcohol abuse, gave her much insight as to who is drinking and who is not. I am not going to give people money to drink their lives away. I might give them some free food, and make them dinner, but that’s about it. They refuse to work. They won’t lift a finger and take any of the jobs they were offered. My bible says that “the man who won’t work, won’t eat.” These people won’t work but they get thousands of dollars a month from the government and live in a house rent-free! They can work and should work, but they won’t. The buck stops here! I did let them borrow money, and ever since, I continue to get phone calls from them asking me to make all kinds of purchases for them. They want to put it on my credit card. But they won’t work! When I helped them once, they kept on and on asking me for money. Then when all my other friends find out, how do you think they feel that I only helped them? And they are alcoholics. I cannot put myself in a position to be a bank to all my friends. That’s not fair to me. And since they are substance abusers who will not work, I can’t help them destroy their lives by enabling them to continue to drink. There is a fine line between helping, manipulating and enabling and some people just don’t know the difference. I can, and I won’t help people destroy their lives.

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Patrick I. Ogbonna February 5, 2013 at 5:47 am

I have a lot some Lads who borrowed huge sums from me and want to pay back. Should I collect the funds when they return it?i

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Patrick I. Ogbonna February 5, 2013 at 5:50 am

I have some Lads who borrowed huge sums from me and want to pay back. Should I collect the funds when they return it?

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tavia April 22, 2013 at 6:41 pm

At Grace. God also teaches his children to have boundaries. So with that sad. We cannot allow ppl to be doormats.

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r0ckcandygirl December 16, 2014 at 9:44 am

2 Thessalonians 3

6In the name of the Lord Jesus Christ, we command you, brothers, to keep away from every brother who is idle and does not live according to the teaching[a] you received from us. 7For you yourselves know how you ought to follow our example. We were not idle when we were with you, 8nor did we eat anyone’s food without paying for it. On the contrary, we worked night and day, laboring and toiling so that we would not be a burden to any of you. 9We did this, not because we do not have the right to such help, but in order to make ourselves a model for you to follow. 10For even when we were with you, we gave you this rule: “If a man will not work, he shall not eat.”
11We hear that some among you are idle. They are not busy; they are busybodies. 12Such people we command and urge in the Lord Jesus Christ to settle down and earn the bread they eat. 13And as for you, brothers, never tire of doing what is right.

14If anyone does not obey our instruction in this letter, take special note of him. Do not associate with him, in order that he may feel ashamed. 15Yet do not regard him as an enemy, but warn him as a brother.

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jean July 2, 2015 at 1:32 am

My daughter comes to my home quite often claiming she needs money for gas & goes straight to my fridge. She left my friend who did her taxes without payment, so I paid it because it is my friend. I also had to evict her for not doing any chores in my home or leaving cig butts on my grass. Tonight she took my grandkids and told me not to ever call her. When she moved out she wouldn’t pay the electric bill, which was the only bill she pd. I refuse to be manipulated or used by her anymore.

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Anon December 22, 2016 at 4:34 pm

What do you do if a family you are extremely close to you comes to you and tells you they are about to lose their home? They beg you for money so they can stop foreclosure? You pray about it and decide to do it, with strict timeline when you will be paid back? A small part of me regrets lending them the money, not because we couldn’t afford to do it, but because I don’t want our friendship to suffer 🙁 I have already started scrutinizing posts on FB…like Oh look they went out to eat, went shopping, eat….ugh I hate this!

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Shelley Thompsob July 27, 2017 at 12:29 am

Bullshit, the Bible specifically says to loan money to those in need and NOT to charge interest . As a last resort? They need the money, you have, lend it, give it, whatever. This is what turns hundreds of thousands of people off organized religion. If we practiced true Christianity there would be no welfare, no poor people, no starving children. But we don’t and there are. You are not a Christian, my friend.

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Jay September 29, 2017 at 9:54 am

I have been helping a friend for five years. I had stepped away for a while because of lifestyle choices they made. After a few suicide attempts they are trying to straighten out their life and get right with God. They help out with a local charity and have started a decent little job. Now they just lost a lawsuit for a debt they incurred sometime back. If I don’t help them they will be out on the street. We argue a lot because of what they did in the past that hurt not only them but many of their former friends. SHould I continue to help them so that they arent back on the street, or should I step away? I pray ad pray, but still I don’t want to just be an enabler

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