When you’re short on cash and you need a little extra to tide you over until next month, borrowing from the bank can seem a little scary. You might think that it’s better to just ask friends or family members to help you out and you can pay them back next time you get paid. It seems simple, but it really isn’t. Borrowing money from friends and family can cause you all sorts of problems, both financially, and in your relationships. It also doesn’t get to the root cause of why you’re short on money in the first place. If you’re thinking about asking a friend or family member to lend you money, here are some reasons that you should think again. (Also read: 50+ ways to make an income online from home now, with or without a business or blog)
It Doesn’t Solve The Problem
If your spending outstrip your income and you find yourself in a bad financial position, you need to sort that out, otherwise, you’re in the same position every month. The bank will refuse to keep lending you money after a while, but family members often won’t. If you know that you can just ask your parents or siblings to cover you at the end of every month, it’s too easy for you to just carry on. Instead, you should get a credit card (you can find the best ones at https://best.creditcard) to cover your extra expenses for the first couple of months. But always keep in mind this is a short term solution while you fix the wider problems. You need to cut spending so your income is enough to cover everything and you don’t need to borrow money every month. If you absolutely can’t cut spending, you need to start looking for a job that pays more money or find some other way of bringing in income on the side.
Usually, there is no interest or a set deadline for the money to be repaid when you’re borrowing money from friends and family and this can cause some serious trust issues. If you take ages to start paying them back, they’ll begin to lose trust in you and that can have detrimental effects on a friendship. If you are going to borrow money from somebody close to you, you should treat it like any other loan. Set up a strict repayment plan with a deadline and make sure that you stick to it properly. That way, you won’t have as many problems.
When you aren’t paying the money back and that person needs it, you put them in a very awkward situation. They don’t want to come across as hostile by demanding money from you but they could end up in a financial hole themselves if you don’t pay them back. That means there’s going to be this awkward thing hanging over you every time you spend time together which can ruin the friendship.
Borrowing money from friends and family is never a good idea. If it’s your only option, it can sometimes work but only if you treat it like any other loan and set out some rules from the outset.