Stretching your budget can be difficult, especially when family and friends add to the strain. There’s nothing wrong with helping family financially, after all, it’s what friends and family are for, but everything has a limit. The question is are you in control of your finances or are your finances affected by family members or friends who drain you financially?
If you can’t keep up with all the hands and mouths relying on your pay cheque, perhaps you need to realise that you are your most important financial priority. Financial advisor from Liberty life, Boitumelo Mothoagae from Liberty Life shares tips on how to take charge of money matters.
Have a formal agreement. Set a realistic time frame for the borrower to pay you back. Remember that if your friend or family member is going through financial difficulty, pressuring them to pay you back quickly will mean that they will rush to pay you back but end up coming back to borrow some more later.
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Only lend money that is yours. Do not go into debt to lend money. Someone who’s desperate for money will always promise that they’ll pay the loan on time but should that person you lend money to be unable to pay, the debt will be in your name.
How often does the borrower keep coming back? If they come back each month, then it means that they may be living beyond their means or not managing their finances properly. Therefore, lending them money is a bad idea as it won’t help them or you.
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Decline politely. If your friend or family member keeps asking for money, decline politely saying: ‘the budget doesn’t allow me to lend money’. Should you find yourself having to take care of their financial needs, you’d need to include their expenses in your budget which will mean cutting down on your own needs.
Choose your company wisely. The habits of the people that we spend time with tend to rub off on us. If you spend time with people who have unclear or more short term financial goals, the chances are you will start to think of your financial goals as well. Similarly, if those around you save money on a monthly basis then you’ll tend to do the same.