What To Say When Someone Asks To Borrow Money

The average person gets asked for financial support in many ways. Usually, we get bombarded with GoFundMe requests and Facebook fundraisers or asked to donate to a collection at work for a colleague's baby shower or wedding. Although those situations can be mildly challenging to say no to, it's not too difficult to create a budget line to prepare for them and move on.

It can be a struggle when someone we love asks to borrow money or otherwise needs financial support, and we can be caught off guard when a friend or family member asks us for a large sum of money. Listen to this week's episode of the rich & REGULAR podcast on financial help and continue reading below for some ideas on how to say no graciously when someone asks you for money.

Say no kindly.

When someone asks to borrow money, we can feel guilty and maybe even ashamed when we don't immediately say yes—even if giving them money would put us in financial hardship. Saying no doesn't come naturally to many people, especially if you were raised to always lend a helping hand or offer support to friends and family, no matter the cost to yourself. Saying no to someone you love is hard to do, but below are some things to consider when someone approaches you for money.

Listen to their story.

When someone asks you for money, start by listening and offering empathy. People often need to be heard just as much as they need actual material support. By giving your friend or family member a safe place to talk about their situation or bounce around potential solutions to their problems, you may help them more than if you just wrote a check.

Communicate clearly and politely.

Saying no right away when someone asks you for help can feel mean and heartless, but it is also the kindest way to let someone down. Avoiding the situation, saying "maybe" or "let me think about it" leaves the door open for them to ask again and pushes the problem down the road, which can build up resentment on both sides. Saying no with kind directness is better than using soft language that can be misinterpreted.

Stay calm and hold your boundaries.

Some people don't like to hear no and may try to persuade you by getting louder and more aggressive. It can be tempting to promise to help someone just to get them to quiet down, especially if you're in a public place. Know that you have the right to leave any situation that makes you feel uncomfortable. If the person asking for money can't handle a kind no, then your relationship may not have been what you thought it was.

Offer help in other ways.

When we can't offer to support someone with financial assistance, we can provide help in other ways. Listening to someone talk about their problems and helping them develop a plan, researching available resources and being emotionally supportive are all things we can do to help our friends and family in tough times.

Remember that although it can be tempting to offer to co-sign for a loan or become a guarantor on a credit agreement, you will be on the hook for the total amount if your loved one stops paying. Not only could you wind up owing thousands of dollars you didn't anticipate, but depending on what you co-signed, it can also negatively affect your credit score, your ability to buy or refinance your own home or car, or possibly even get a new job, as some companies pull your credit report before providing an employment offer.

Give smartly.

We focus so much on saving and financial freedom to live our best lives, and that can include helping people we love. Just be cautious that you don't become your family's only safety net. If you do decide to give, consider these guidelines before pulling out your checkbook.

Define your terms.

We specifically use the word giving instead of loaning. Unless you are willing to draw up a contract and possibly take someone to court to reclaim the funds, consider making a gift of the money you have decided to give someone. That way, there are no unclear expectations or hurt feelings for missed repayment deadlines.

If you decide to provide a loan instead of a gift, make sure you research ways to protect yourself. Depending on the amount of money, consider using a contract or consulting an attorney to help you create a fair deal for both you and the receiver.

Include giving in your budget.

It is important to know how much you can safely give someone without putting yourself into difficult circumstances. Create a line item in your budget titled "Giving" to have ready cash available without having to cut back in your own life.

Consider keeping this line item separate from any charitable giving you do so that social causes you care about do not constantly come in second to a family member's financial requests. Budgeting a giving category also tells you how much you can afford to give someone. Once you've exhausted your giving budget, you don't have any other funds to provide without removing money from other line items.

Keep your goals in front of you.

When someone you love needs help, it can be tempting to rush right in and offer to save the day. That impulse is noble, but if it puts undue hardship on your finances, you should re-examine your motives. Remember that you are saving so you and your family can live your best life, and providing gifts and loans to everyone who comes asking can hurt your financial future.

Julien Saunders

Julien and Kiersten Saunders, Money Editors for SUCCESS magazine, are the couple behind the award-winning blog and forthcoming book, rich & REGULAR. They are producers and hosts of the original series, Money on the Table, which blends their passion for food with thoughtful conversations about money

Kiersten Saunders