There are many situations when you shouldn't lend money. Money often causes problems between friends and family members. You might think that people will prioritise repaying a loan when they've borrowed from friends or family. Unfortunately, the reverse is often true, and they think they can pay back the money when it suits them - which may be never. Here are some of the circumstances when you shouldn't lend money …
One example of when you shouldn't lend money is if you can't afford to lose it. Even if people have every intention of paying you back, their finances may worsen and leave them unable to repay the loan. It's often said that you should only lend money if you're prepared to lose it. That doesn't say much for the trustworthiness of some people, but it's sensible.
Do you have one of those relatives who's always in financial trouble? Do they pay you back, but then end up asking yet again? If the would-be borrower is always looking to you to rescue them from a financial hole, maybe it's time to call a halt to the situation. You're not really helping them if they can't sort out their own problems, and you're certainly not helping yourself.
This is a time when it would be absolutely foolish to lend someone money. They may swear it's only for a short time, but if you need to borrow it will be you paying the interest if they don't repay you when they promised. It's just as unwise to borrow from one person to lend to another, which may happen if, say, your sister doesn't want to ask your parents. Don't get involved in this.
If somebody wants to borrow money for non-essential items, don't help them out. People need to learn what is essential and what isn't. If it's something they desperately need, it's up to you whether you want to loan them the money. But why lend them money for something that they want, rather than need? It won't hurt them to do without.
If you've heard "Can you lend me …?" repeatedly in the past, that suggests a couple of things. One, that they are constantly having money troubles, and two, that they now see you as a bank that won't say no. You've set a precedent. But now it's time to shut the doors of your virtual bank. And if they try using emotional blackmail on you, don't give in.
Everyone can hit hard times through no fault of their own. But in general, adults should be responsible for their own finances. If someone is asking for a loan because they've got themselves in a mess, then they should sort it out without your financial help. Restrict your input to offering them advice on how they can learn to manage their finances better.
Definitely refuse to lend someone money if they haven't paid you back previously lent money. Some people are adept at repeatedly borrowing small sums of money; it may not seem like much each time but it soon adds up. And with all these small loans you might lose track of what they have and haven't paid back.
Refusing to lend someone money can be difficult. They may get angry with you and accuse you of creating problems for them. But you are under no obligation to lend anyone any sum of money. It could even create financial problems for you. Have you ever fallen out with someone over money?