Others and Your Money: Lending

When a friend asks to borrow money

Anthony, a friend of yours, approaches you at school.

You and Anthony aren’t close, but he’s cool. He tells you he’s in a bind and that he really needs to borrow $60 from you, right away.

You weren’t prepared for this request and you’re not sure how to respond. You don’t really want to loan out almost all your walking-around money, but you don’t want to disappoint your friend, either. Plus, you’re not sure how to say no.

So you lend him the money, and he says he’ll pay you back in a week.

Once you’ve loaned money

That week comes and goes. No money from Anthony. In fact, the next time you see him at the beginning of the next week, he comes up to you and strikes up a conversation like the loan never happened. You decide you’ll give it another week, and then you’ll say something. The next week goes by, and still you don’t hear anything from Anthony about the money. So the next time you see him you say, “Hey, do you have that $60 I lent you?” Anthony says, “Oh yeah. Sorry. I’ll get it to you soon.”


Friendship and money: oil and water. —Mario Puzo

The story of Anthony uncovers several of the problems that can arise in lending money to friends.

You can lose your money.

You can experience a bunch of unwanted emotions.

You can even lose the friend you’re trying to help.

Let’s explore some strategies for dealing with things differently.


Good friends settle their accounts speedily.
— Chinese Friendship Proverb

Strategies for lending money

At some point in your life, you will certainly be asked by a friend to borrow money. If you’re like most people, you’ll probably feel uncomfortable.

There are many strategies that can help you handle the situation comfortably and in a way that will protect your money AND your friendship:

  • Know in advance what you’ll say if someone asks to borrow money.
  • Have a flat policy of not lending money.
  • Have a set lending limit (say, $20).
  • Consider loans as gifts (assume you’ll never get them back).

We’ll explore these in greater detail.

Have a standard lending phrase

No matter what your lending policy is, you’ll want to know in advance how you’re going to respond. This will leave you and your friend feeling okay, even if you choose not to lend the money. If a friend says, “Hey, I need 20 bucks,” you might try to use humor. You can say, “What a coincidence. So do I!” Or you can blame it on your parents (they’ll love you for this). Something like, “Promised my parents I wouldn’t lend money.” If you have a lending policy and state it firmly, almost everyone who asks will understand and back off. Most will respect your position, and even those who don’t may see there’s no point in asking you for money again. Spend a few minutes and think of a line to use when friends ask you for loans. Then practice it so you won’t be off-guard when someone asks.

Consider a no-lending policy

Personal loans ruin friendships all the time.

If the person who borrows can’t repay it, the lender can come to resent the borrower. In fact, sometimes the borrower becomes angry toward the friend who lent him the money. That’s because every time he sees that friend, the borrower is reminded that he’s taken advantage of the friendship and should feel guilty about it.

Imagine lending money to a friend and then having that friend become angry at you, because he feels ashamed at not being able to pay you back.

If you think this could happen to you, you should seriously think about making a policy not to lend at all.

Clearly set expectations

Even if sometimes you might be willing to lend money (maybe to certain close friends, or maybe only small amounts), you still need a strategy. You can’t simply say yes, hand your cash over, and hope for the best. Part of the loan transaction has to be an agreed-upon day your friend promises to repay you. You might say, “You’ve got to pay me back in two weeks. If not, after two weeks I’m going to remind you every day until you do.” This way, you’ve agreed ahead of time that you’re going to bring it up if your friend doesn’t repay you.

Consider it gone: lending as a gift

Maybe you’re comfortable lending money but you don’t want to have to confront your friends if they don’t remember to pay you back. If that’s the case, then don’t think of it as a loan at all. Think of it as a gift.

If a friend asks to borrow money, and you want to make the loan, just consider that money gone. A truly good friend won’t ask you to borrow money over and over and not remember to pay you back.

If your friend pays you back, that’s great. If not, consider having a “no lending” phrase ready if he dares to ask you again.

21 money gift

The richest man in the world is not the one who still has the first dollar he ever earned. It’s the man who still has his best friend.
— Martha Mason

So now you have some strategies to help you when friends ask for money.

You’ll have a policy.

You’ll have thought in advance and in detail about what your willing to do and under what conditions.

You’ll know what you’re going to say.

This will keep you on track with your policy and keep things more comfortable for you and your friend.

You’ll know what you’re going to do if you don’t get paid back.

You’ll give reminders without getting angry, or you’ll pretend it’s gone and have a happy moment if you do get paid back.

What would you do now?

Now that you’ve learned some strategies for dealing with loan requests, let’s look at how you could handle Anthony differently.

You have a response ready. With a no-lending policy, you smoothly say, “Oh, I’ve told my parents I won’t lend money.” Problem solved. Anthony knew you were a long shot. You’re not that close, remember?

Or let’s say your policy is not to loan more than $20, for more than a week. You say, “I only have $20 and I’d need it back Tuesday.” Problem lessened. Anthony will borrow the $20, and he’ll have an easier time repaying because it’s less. If he doesn’t pay you, at least you’ve saved $40 of the $60 you would’ve lent him if you weren’t ready with your $20 rule.

Or maybe you’ve decided to consider loaned money gone. Perhaps you’d say, “I only have $20 to loan,” and save $40 and a lot of stress.


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