With companies going bankrupt on a weekly basis, hundreds of thousands of businesses with huge financial losses, and millions of Americans out of work, furloughed or laid off, it is clear to everyone that we are living in challenging economic times because of the coronavirus pandemic.
Some people may seek financial help from their friends and family members. While it might be a considerate and supporting act, lending money to friends or family members does have its challenges and disadvantages and should be handled with care. If you ever find yourself in a similar situation and someone you know needs money assistance, here are the worst mistakes you could ever make when lending them money, according to financial experts.
Lending money you can’t afford to give
A good rule of thumb when it comes to lending money to someone you know, perhaps the most important one, is to determine if you can really make it without the money you’re thinking of giving away. Unless you can come up with a clear, positive answer, then you’d better keep the money, says Mark Charnet, founder and CEO of American Prosperity Group.
“If the answer is yes, then you must dig deeper into the request based on the person’s history, personality and trustworthiness,” he adds.