Ok responsible people, this edition of “Becoming Financially Successful” has to do with lending friends money. Earlier in the week I completed a budget for a female client who makes $3500 /month. Out of that $3500, she sees a little under $1500 for herself and her own expenses. Everything else goes to treating people, fronting money during outings and basically letting people borrow whatever they need when they claim to need it. Luckily for her, she doesnt have to pay any rent out of that $1500 but with the way things are going, she never will be able to. Why does she do this? 70% wanting to feel needed… 30% actually believing these people need money when they say they do.
I’ve always supported a policy of never ever ever ever lending friends money. Lend your ENEMIES money so they can leave you alone. Lend an annoying girl or guy youre messing with some money so you can never hear from her/him again. But friends? Keep the money out of the equation. This is part of the reason why Im still friends with all the same people from elementary school. You may be thinking I’m harsh but here’s the reasoning:
A. Most friends have good intentions but lack the discipline to follow through on those intentions. You already know which ones they are too. These are the same friends who lacked the initial discipline to save money in the first place and not end up in the situation they currently are in. So why do you think their discipline will be enhanced now that they have to pay you back?
B. The most common way people lose friends is through disputes over money. The second is through disputes over who f*cked whos girl/guy. You really want to put yourself in another position to give up years of friendship? Personally, Id rather lose a friend over messing with my girl rather than $100. Atleast I can control the first scenerio.
C. A better gift than giving someone the money they’ve asked for is to teach them how to manage the money they already have/make. Each of us have the power to change the way America thinks about money. If we are constantly allowing our friends to “lean on us” when they feel they are struggling, then we are helping to shape unhealthy lifelong habits. In essence, we are allowing them to become lazy and let them think there is no need to budget when someones always there to bail them out. When you think about it, if someones asked you for money four months in a row,its not technically a bailout is it? Its a dependancy.
D. Some people need to fail now to succeed in the future. I’m sure many of you have heard that if you keep kicking a can down the street, you’ll never bend over and pick it up. If your friends dont see the repercussions of their carelessness with their finances now, they will never learn the pain of what could happen if you wernt there …until they’re too old to handle it. Because I assure you, one day you wont be there and they will be too old to easily rebuild from something serious…like bankruptcy.
E. Lastly, but equally as importantly, its about the economy. Lending means getting paid back. When’s the last time you were paid back after lending someone some money? You think thats going to change in a recession?