Enabling or Empowering?

Myth: If I loan money to a friend or relative I will be helping them out. Truth: The relationship will be strained and changed forever if you either loan money or are the recipient of such a transaction.

We love our family don’t we? And of course our family loves us. But to what extent do we take that love when it comes to money matters? There can be a lot of temptation to ask relatives for money or loan it when an emergency arises. Typically these loans are interest free and can be accessed without a run of your credit. But what are you truly doing when money is exchanged between you and someone you love?

Here are some reasons why it is never a good idea to loan money to or from relatives and friends:

1. You are creating a slave/master relationship between the parties involved. A slave is owned by the master until his/her debt is paid. We want to call our father “Dad” not “Master”.

2. Each time you see the person who lent you money you will think about the debt owed and that causes anxiety amongst everyone. Thanksgiving dinner doesn’t taste the same when money matters are on the table.

3. It is easier to miss payments because you believe that your relatives or friends won’t hound you like credit card companies. At least you will make it a priority to pay the credit card companies back. Typically when money is loaned to relatives it is not considered as important.

4. The benefactors of the loan will think they now have a right to ask questions about your spending habits. They believe the right to that information has been bought with your loaned money. And… if you have nosey relatives and friends your financial business could spread throughout the family tree.

5. When you loan someone money you enable the overspending. If the behaviors that got them into this situation are not dealt with then more debt will still be incurred. This does not help the borrower, but it can hurt them tremendously.

The best way to handle difficult financial situations is to handle them yourself. This breeds responsibility, self-confidence, strength and character. When you’ve successfully gone through a tough time, but managed to do it all on your own you feel like you can take on the world.

When my husband and I climbed out of the mountain of debt we had, we did it without the financial help of anyone. As a result, we knew that we could tackle any financial setback that came our way including job loss, career changes, family emergencies, etc without leaning on anyone. Our relationship grew stronger and we felt empowered! Don’t you want the same feeling?

Let’s not enable our loved ones or allow ourselves to be enabled. If you truly want to help someone financially just give them the money with no strings attached. A gift is better than debt any day. Let’s tackled the real problem systematically and change the behaviors that caused us to need extra money in the first place. That is true empowerment!