Helping out a friend or family member by sending them money with a money transfer service, like Remitly, writing them a check, or handing them cash can really help them get out of a bind. Unfortunately, loaning money also comes with a lot of stress.

You work hard for your money, so you shouldn’t just give it away every time someone asks, but that doesn’t mean you don’t want to do everything you can to help someone you love!

It’s okay to loan money to a loved one, but make sure you follow these tips to make it less uncomfortable for you and them.

Only Loan Money If You Can Afford It

Some people just can’t say no. If you’re one of those people, especially if someone close to you asks, you probably end up loaning them money that you don’t even have yourself.

The first rule of loaning money is not to loan money when you can’t afford it. If giving someone else some cash will put you in a tight spot or prevent you from paying your bills, it’s okay to say no. Make it clear that you just can’t afford it and your loved one will likely accept your explanation willingly.

Don’t Expect to Get Paid Back

Most people have good intentions when they borrow money. They want to pay it back. Unfortunately, that doesn’t always happen. When it doesn’t, it can cause a lot of strain on families and friend groups.

You can avoid the strain by not expecting to get paid back in the first place. Only loan money you can afford to give away as a gift. That way, if they never pay you back, it’s totally okay!

Don’t feel like you have to avoid reminding them that they owe you money, though. Find pleasant ways to remind your loved one to pay you back, even if you don’t expect repayment. They may surprise you!

A few ideas include:

  • Asking them pay you back with dinner
  • Using an app so they can pay you back in small increments
  • Letting them complete some chores or errands for you

Let the Recipient Decide If It’s a Loan or a Gift

Don’t want to worry about bugging them or letting the money go? Let the recipient decide if they’re borrowing money or if they’re receiving a gift.

When you give them the money, tell them they get to decide. If they pay back the money, it will always be there to borrow. If they don’t pay back the money, it’s a one-time monetary gift, which means they can’t ever ask for more.

This makes your expectations clear upfront, but it also provides your loved one with some control, which will only make your relationship stronger.

Get It in Writing

If you are determined to give them a loan, and you expect to be repaid in full, you absolutely have to get it in writing. Make the terms of the agreement clear by including the timeline for repayment and repayment options. Then, get it notarized.

This shows the person you’re lending money to that you’re serious about getting paid back. It also makes the terms of the agreement clear so there isn’t any confusion.

You may never decide to take them to court, but if you’re loaning a large chunk of money and they don’t abide by the terms of the agreement, having it notarized means that legal intervention is always an option.

Find a Different Way to Help

Sometimes, cold hard cash is the best way to help, but if you have a friend or family member who is always hitting you up for money and spending it in ways you don’t appreciate, it’s a good idea to find different ways to help. This is also a great strategy if you don’t have a lot of money to give them, but you still want to help them out!

A few ideas include:

  • Cosigning a loan, if you’re certain they’ll pay it back
  • Helping them create a realistic budget
  • Paying them for completing odd jobs around the house
  • Paying them to watch the kids
  • Prepaying some of their bills
  • Doing the research to connect them with local resources
  • Giving them gift cards so you know how they’re spending the money

Loaning money to a loved can make you feel good about helping and it can definitely help out your loved one, but it can be awkward. With these tips, both you and the recipient will feel a lot better about the transaction.