Should You Really Be Loaning Money to Family?

Dear Selfless Esteem,
My relative asked me for rent money because she said her business hasn’t bounced back from the pandemic so she might have to close it. I sympathize, but should I really be loaning money to family? I finally have some savings, but I have to look out for my own family. I want to help, but that seems like a lot of money to ask of someone. She says she’ll pay me back, but I don’t even know when she would be able to. What should I do?
Signed,
Thin Wallet

Dear Thin Wallet,

Loaning money to family is a tough decision. Let’s look at each point in your letter and then address them.
💰 Your relative might have to close her business because of the loss during the pandemic.
💰 You finally have some savings, but you have to look out for your own family.
💰 She says she’ll pay you back, but you don’t know when.

Loaning Money to Family in Hard Times

An important factor to consider is if your family member is truly in need. It seems like your relative has a work ethic and is closing her business because of circumstances beyond her control.

Otherwise, you could end up enabling someone, who is not a good steward of their money. However, it’s possible that the person could change their spending habits. If it’s questionable but you still decide to give that person a chance, then you may want to set boundaries, i.e., express that it’s a one-time loan.

Taking Care of Your Own Family

You stated you have some savings but that you need to look out for your own family. I don’t know how much you’ve saved, but a general guideline is to have enough savings for 3 to 6 months of living expenses in case of emergency. Either way, it’s ok to decline, or if you still want to help, you can offer to pay partially instead.

I believe that looking out for your family is not on your shoulders alone. God is always with you (Deuteronomy 31:6; Joshua 1:9), and He promises to meet all your needs (Philippians 4:19). Furthermore, God can help you as you give to others. “A generous person will prosper; whoever refreshes others will be refreshed” (Proverbs 11:25 NIV).

Loaning Money to Family…Without a Loan Agreement

You stated that you don’t know when your relative would pay you back. If you decide to pay the rent, understand that you may not get that money back. Can you (and your budget) accept that? Or maybe your relative will pay you back…years later.

Giving without expecting anything in return will prevent disappointment and consequential discord in your relationship. And if your relative ends up reimbursing you, then you’ll be pleasantly surprised.

In conclusion, the choice is yours. But here are two final questions to consider:

1) “If someone has enough money to live well and sees a brother or sister in need but shows no compassion—how can God’s love be in that person?” (1 John 3:17 NLT). Do you have “enough money to live well?”

2) “Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver” (2 Corinthians 9:7 NIV). Could you give anything without reluctance or compulsion?

Making a decision about loaning money to family requires a lot of thought—and prayer. (For more information about God, see the posts, “How To Pray in 5 Simple Steps,” “The Real Truth About God” and “Why Selfless Esteem Is Better Than Self-Esteem.” You may also be interested in “How To Stop Worrying About Money.”) The best thing you can do is ask God for wisdom; He will certainly guide you (James 1:5).💸

All Scripture quotations, unless otherwise indicated, are taken from the Holy Bible, New King James Version®. Copyright © 1984 by Thomas Nelson Publishers, Nashville, TN. Used by permission. All rights reserved.

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