Beware of Lending your Friends Money! 

When a close friend asks to borrow money, it can be difficult to say no. But you may want to think twice before jumping in!

Consider these reasons for why you may just want to say “NO” to lending to a friend: 

1. Loans can become open-ended. An open-ended loan happens when neither party sets expectations for when loan payments are due, how much they should be and if the borrower will be paying interest.
   
   It’s tough to set these kinds of expectations with your friends – but it’s necessary if you want the loan to be paid back in a timely manner.
   
   
2. Your financial health could be put in jeopardy. Lay-offs, unexpected expenses or other emergencies could necessitate that you dip into your savings at any time. But what if you loaned those savings to a friend and they can’t pay it back? It’s safest to keep your cash in your accounts.
   
   TIP: Even co-signing on a friend’s loan can seriously hurt your credit if they don’t make payments responsibly. Always be cautious when it comes to your finances!
   
   
3. It could enable poor financial habits. We all want to support our friends. But sometimes loaning them money may just end up enabling them to continue practicing bad financial habits.
   
   
4.  Your friendship could become strained. Having to repeatedly ask a friend to pay back their loan can be awkward, causing strain on your relationship. And if they never pay you back, it could ruin your friendship forever.