Friendship is supposed to be built on mutual respect and honesty but when money enters the picture, things get complicated. Maybe your good friend borrowed a substantial amount of money from you and now you haven't heard from her in weeks. You feel used and you wonder if she is really a true friend. Here is how you can navigate money problems that arise in friendships.
Make sure you're not enabling bad money management
While there is nothing wrong with giving friends money in their time of need, you need to discern if this friend is really in need or if you are enabling his poor money management habits. For example, if your friend always requests funds to help him purchase things for his new baby but he has two jobs, you need to ask him why he is struggling to buy the baby's things. But if this request is rare, it's okay to help out.
Get the agreement in writing
Although you trust your friend to repay what he borrowed, it is wise to put the agreement in writing in the event legal issues arise. The written agreement should include the amount of money borrowed, the due date of repayment and the date that you gave your friend the loan.
What if my friend will not repay me?
The first thing you should do is have a respectful conversation with your friend concerning his failure to repay you. Mention that you don't want to feel like you're being taken advantage of and that he needs to respect you enough to repay the money he borrowed. If you loaned money to your friend on several occasions and he does not repay on time, don't loan him money in the future.
Don't be overly stingy with friends
You want to protect yourself and assets from friends who don't repay or help you financially at times, but you don't want to go to the other extreme and assume that none of your friends will repay what they borrow. Sometimes it is a good idea to give money to friends without always expecting repayment or something else in return. There are times when your friends fall on tough times and they want to know if you are willing to give because you love and care about them.
Help friends manage money better
Sometimes it is not the money that your friends want. They admire the way you manage money and want assistance for themselves. Spend a few hours with your friend one day and look over his financial statements. Talk to him about creating a budget and how he can control his spending. Counsel him in a nonjudgmental way but confront his bad habits when necessary. This is one of the best ways to show love to your friend.
Friendships are essential to our lives but we don't have to let money issues ruin them. The key is respectful communication and setting healthy boundaries regarding finances in friendships. By doing this your friendships will be stronger.