Is Lending Money To Family Always The Right Thing To Do?
Is Lending Money To Family Always The Right Thing To Do?
Monique Danao Thu, May 22, 2025 Moneywise
I’ve hustled hard to make something of myself. Now my sister, 29, wants to borrow money — again. What do I do?
Consider the case of Eric, a 33-year-old who is debt-free, owns his own business and lives comfortably after years of hard work and risk-taking. When his 29-year-old sister recently asked him to cover a few months of her rent, he said no.
Lending money to family: What could go wrong?
According to Lending Tree, 35% of Americans who lent money to family or friends reported negative consequences. These include hurt feelings (14%), decreased contact (11%) and resentment (10%).
Lending to family can also blur emotional lines. It’s one thing to help someone in a crisis. But if there’s no plan for repayment or accountability, it can easily lead to resentment.
A short-term favour can quickly shift the family dynamic and turn one sibling into a provider and the other into a dependent.
Financial help doesn’t equal financial handouts
Saying no to lending money doesn’t mean saying no to helping. Some forms of support can be more beneficial in the long run. Here are a few alternatives that might empower your sibling more than a temporary bailout:
Offer to review their budget: Sometimes, all it takes is a fresh set of eyes to spot where money is going. Instead of offering cash, propose working together toward a goal like building an emergency fund.
Help them apply for jobs or update their resume: A part-time job might not cover everything. Offer to help update their resume, practice for interviews, search for better opportunities or tap into your network on their behalf.
Help them explore debt consolidation: If they’re overwhelmed by bills, consolidating the debt into a single, lower-interest payment might help them catch up.
Set boundaries with conditions: If you choose to help in the future, consider setting clear expectations, like one-time assistance, partial repayment, or proof of an action plan.
Connect them with a financial advisor or credit counsellor: If the situation is complex, a professional can offer tailored advice and help them build a sustainable plan to get back on track.
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