When times are tough and you are left with few alternatives, it can be tempting to approach family and friends to ask for money during a financial emergency. As the people closest to you, and those most understanding of your situation and concerned about your welfare, they make an obvious port of call during times of need.
Unfortunately, it is not always possible to borrow more money from traditional sources. Sometimes life can throw up unexpected expenses, and such events can often occur at times when you have already exhausted your regular bank account and savings, and reached your credit limit. Borrowing from family and friends can be a reliable last resort for obtaining extra emergency cash when you need it. Since they know you well they are far more likely to lend you money and without the extra hassle and paperwork of applying for a loan through your bank or other financial institution. Of course, family and friends are also unlikely to request interest on money you borrow from them, although you should always try to offer them something in return for their kindness wherever possible.
The Negatives To Borrowing From Friends and Family
Initially, the people closest to you will probably be more than willing to help you out, depending upon how desperate your situation is. However, if this becomes a regular occurrence then they are likely to get irritated at your constant requests for money and eventually they may hold a permanent feeling of resentment towards you. If you must rely on friends and family for money, then you must be absolutely certain that you can pay it back in full and on time. Reassure them that you will be able to repay them by telling them the precise date when you will have the means to do so. For larger sums you can even put together an informal IOU (I Owe You) or contract as written evidence of your borrowing, and give them extra confidence that you are serious about repaying the full amount and by a pre-specified date. You must be aware that failure to do so can have a devastating impact on your relationship and in some cases is simply not worth the risk. As a matter of principle you should always try to avoid asking friends and family for money, particularly if you know you might have trouble paying it back. It is generally best to exhaust all other options before turning to the people closest to you for financial support. After all, your relationships with your family and friends are the most important thing.
By Paul’O Hara, a financial blogger and banking specialist from London, UK.