Lending money to family or friends is a bad, bad idea. While this is a well-known fact, many of us still go down that perilous road. Doing this is dangerous as not only your loaned money but also your relationship with that person is at stake. If you find yourself in an awkward situation where a friend or family member has asked you for a significant amount of money, used it and conveniently forgotten about it, use these tips to ask your money back, without damaging the relationship.
How do you politely ask for money back from friends and family?
1. Give gentle reminders
If you see your borrower splurging money on all the luxuries of life without realising they owe you some, it can get really annoying. However, give them the benefit of doubt assuming that they have genuinely forgotten about the loan and instead of blasting them, give them a polite reminder that they owe you money. When you do so, it is better to do it in person and privately. For all you know, this simple trick will alone do the job!
2. Ask for updates
If your friend borrowed money from you for an expensive course, ask him how his lectures are going. This will not only remind him about the money but also give you a chance to directly ask them when they will be able to repay.
Similarly, if the money was borrowed to set up a business, no harm in requesting for the latest update, regarding where it is headed, investors on board or even a business plan.
3. Help them make a repayment plan
If your friend or family member is unable to pay all the borrowed money in one go, explain to them that they can repay in instalments. For example, if they have borrowed S$1,000, they can give back S$200 every month for five months. This will provide them with some solace and ensure that your money starts to come in.
4. Give them a reasonable deadline
If your borrower was unable to meet the deadline agreed on when the money was lent, have a discussion with him and zero down on a new, rational deadline. Doing this would make your friend or relative feel that you care about them and are willing to give them a chance.
5. Guide them with financial planning
In case the loved one who has borrowed money from you does not know effective financial planning, you can offer to help him. Not sure how to go about it? Why not share these simple but effective resolutions to save money with them?
6. Let them pitch in for you
If your friend borrowed money from you and hasn’t been able to repay it, ask him to pay your share at the next night out when both of you go out. This will not only remind them that they need to pay you but also ensures that you get at least some amount back.
Your friend or relative bought something with your money and has been unable to pay you back for some reason. Instead of ending the relationship, you could suggest a barter deal. This means you ask them to give you the item they bought using your loaned money or give you something of equal value.
Sometimes, they could also offer you a service in return. For example, if your friend has skills as an electrician or is a contractor, he can offer some of his services to offset the amount he owes you. Or if your friend is a Grab driver, how about agreeing on a number of rides he will give you?
This deal might not be as perfect as getting your cash back but you will at least get something of the same value in return. In some cases, it could even be a win for both sides.
8. Forgive and forget
Now we know this is easier said than done. However, if a firm relationship is at stake, it is always better to choose it over money. If your loved one is unable to pay you back and you feel your relationship with that person is worth it, let the money go assuming it was a gift. While you would feel extremely sad and frustrated about losing your hard-earned money, your borrower might be feeling upset and guilty too. Assume they tried all means to pay you back but just couldn’t and forgive them.
Whatever you choose to do, do it with patience and kindness. Realise that your loved one could be feeling equally miserable about this situation and would try their best to pay you back. In the worst-case scenario – if you don’t get your money back – you would still learn never to lend money to a loved one the hard way.
Now that you know what you can do to get your money back, somethings could make the journey a lot more difficult. Here are some things not to do:
- Announcing on social media platforms: This is definitely a no-go. Public shaming is unlikely to get you your money back. On the other hand, you could tarnish both your reputation and the relationship you share with your borrower.
- Asking for it during family events, reunions or social gatherings: Finding an appropriate time to have the conversation is essential. Doing it in front of family, friends is not ideal and strongly not advised.
- Doling out constant advice: Lending money does not make you the smarter one. It does give you an upper hand, but not a free reign to constantly advise the borrower on how to do things right.