Can I afford not to have access to these funds for a period of time?
If my loved one doesn’t pay me back, will the lost funds make it difficult for me to meet my financial goals?
How will I feel toward this person if he or she doesn’t repay as promised?
If your budget doesn’t have room for lending money to family or friends, you should turn down the request. Yet if you can afford to give your loved one a loan (and you believe in your heart that it’s the right thing to do), consider the following approach. Loan the money without expecting to get paid back. That way, there are no harsh feelings if the loan doesn’t end up getting paid back.
Whether you tell your loved one that the money is a gift or whether you accept that it’s a gift in your heart, this may be the best way to protect the relationship. Then, if your loved one comes through and pays you back, it’s a bonus. If you aren’t comfortable accepting the fact that you may never get the money back, you’re better off saying no to the loan. It’s important that open and honest communication is happening between both parties.