Lending Money to Friends: Balancing Support and Friendship

Deciding whether to lend money to a friend can be a tricky and potentially challenging decision. It involves balancing the desire to support a friend in need with the risk of straining the relationship if the loan is not repaid. This article explores the pros and cons of lending to friends, providing insights and examples to help you make an informed decision.

Money Lending and Friendship

Unless it's a dire emergency, the wisdom of the Bard, Shakespeare, rings true: Neither a borrower nor a lender be; for loan oft loses both itself and friend. The act of lending can lead to complications, as friendships may become strained if repayment is an issue.

My Experience: Avoiding Lending to Friends

I don't loan money to friends. My best friends, like myself, manage money wisely, so they don't need loans. In college, I lent a friend $50, but it was swiftly repaid. However, these days, I only lend to certain family members who are guaranteed to pay me back. Even with my son, I prefer to provide financial support instead of loans.

Deciding What You Can Afford to Give

The decision to lend money should be based on what you can afford to give and let go of without regret. If there's an issue with repayment, be prepared to walk away from the money. If you're not comfortable with this, it's best not to risk the loan. It's essential to maintain your financial peace of mind and not let the money issue complicate your friendship.

A Risky Loan: A High School Friendship

While I generally avoid lending to friends, there was one instance where I made an exception. My high school friend from 20 years ago, a successful orchestra conductor, came to me seeking financial help. He had an opportunity to purchase quality violins in Romania that he could then resell for a profit in the U.S.

A Supporting Hand: A Mutual Win

I lent him $6,000, not as a loan but as a gesture of support and assistance. Five years later, he visited me with good news; he had started an import business for these violins. He handed me an envelope with $6,000 and a violin and bow worth around $5,000, saying, "Here is your interest." With my love for the violin, I played it in my youth but eventually realized I didn't have the time to dedicate to it. So, I gifted the violin to a deserving student, enriching their life and my own in the process.

Conclusion: Weighing the Risks and Rewards

Balancing support and friendship requires careful consideration. Lending money can create tension in a relationship, especially if repayment is a concern. It's important to weigh the potential risks and benefits of lending to friends and to approach these situations with caution. By understanding the dynamics at play, you can make a decision that strengthens your relationships without compromising your financial security or peace of mind.