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If you’re struggling financially, is there ever a good way to ask your parents for help? Read More...

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Casey Bond

The idea of borrowing money from friends or family has always made me feel…gross.

In all honesty, I’d rather be broke than deal with the icky feeling of owing someone money.

There’s something about introducing a financial transaction into a personal relationship that almost always ends up in some sort of discomfort — especially when parents are involved.

One day, you’re the independent, successful adult you struggled so hard to become, proud of your accomplishments and your ability to handle your shit.

The next day, you’re once again that awkward sixteen-year-old begging for gas money. It’s humiliating.

But sometimes asking your parents for financial help is unavoidable. In fact, about half of college students expect their parents to support them financially for up to two years after graduation.

Maybe it’s not so bad to ask your parents for money.

While your first instinct is to cringe at the idea of asking your parents for cash, the reality is that it might not be that bad.

First of all, they’re your parents. They’ve taken care of you, and they probably expect you to eventually be able to return the favor. They’ll always love you and probably be willing to help out.

Plus, they’ve had years to grow their wealth while you’re still getting used to the idea of paying someone for running water. When you combine your need for financial help with the potential to learn from your parents, it doesn’t seem so bad to get a little help and encouragement.

So whether you’re struggling to find post-college employment and need to move back in for a while, or you’re a few thousand dollars shy of owning your first home, here’s how to navigate the tricky conversation of asking for financial help from Mom and Dad:

Decide if you need a gift or a loan.

Before you even broach the subject, determine exactly what it is you’re asking for.

Depending on your mom or dad’s personality, you might be more likely to receive a loan than a handout. If so, figure out exactly how much you need to borrow, how long it will take to repay the loan, and whether or not you will also pay interest.

Many parents like the idea of a loan because you are showing a certain level of responsibility. You don’t just ask your parents for money; you make it clear you’re asking for help and you plan to repay the money. This can be a good strategy.

Many parents won’t even require interest. Or, if they do, they charge 1% or 2% APR. The good news is that there are websites that can help you create these types of agreements with each other.

One app is Frank, which makes it easy to set up loans between friends and family, and manage repayment — all without awkwardness. Sometimes you just need to have that third party (even if it’s not a real person) to provide a bit of a buffer.

On the other hand, you might know very well there’s no way you will be able to pay the money back. In that case, you’re asking your parents for a gift, not a loan.

Instead of making promises you can’t keep, be prepared to state your case as to what, exactly, you need and why your parents should be willing to make the investment.

Which brings us to the next step.

Have a solid case to present.

You might technically be an adult, but in your parents’ eyes, you will always be their child. However, this is not a situation in which you want to be viewed as immature or childish. You need to appear prepared, confident, and accountable.

If you’re going to ask your parents for money as a gift, you need to have an action plan ready to present. Write it down, review it several times, and believe in it. Know the weak points so you can properly address them.

Talk to your parents calmly and explain your situation clearly. Be prepared to negotiate. And above all else, don’t get emotional or attempt to manipulate their emotions.

It. Will. Backfire.

Don’t compromise your parents’ finances.

Some parents are willing to sacrifice everything to help out their kids, no questions asked. Others prefer to send their children to the School of Hard Knocks, even if they have to repeat a few grades.

If your parents are more like the former, be especially sensitive to how your request for financial assistance will impact their well-being.

Will Mom have to dip into her 401(k) to cover your student loan debt? Is Dad planning to work a few more years so you can get back on your feet? Be real about the impact you will have on their lives. They’ve already given you so much. Should they be sacrificing so you can be a digital nomad or get an expensive graduate degree?

It’s one thing to ask for $1,000 to help you cover unexpected car repairs. It’s quite another to ask for $15,000 to pay off the last of your student debt.

Ask yourself if you’re really okay with being the person who jeopardizes your parents’ golden years after they’ve worked so hard — for decades — to reach them.

Yeah, didn’t think so.

Should you even do it?

Turning to the Bank of Mom and Dad can be tempting when you’re seriously short on cash. But there’s a host of potential landmines when you ask for money from the people who used to change your diapers.

First, ask yourself if this is going to cause problems with boundaries you’ve been trying to enforce. It’s hard to make demands of your parents if you keep turning to them for financial help.

Consider whether you’re looking to your parents for financial support because it seems easy or because that’s really your only option.

You’re a grownass adult, so if you have the ability to do a little extra work to solve the problem yourself, try that before you ask your parents for money.

There’s nothing wrong with getting help from Mom and Dad if they’re willing and you’re in a tight spot. You shouldn’t take advantage, though.

It’s almost always best to suck it up and figure it out on your own if you can. After all, they’ve already made the biggest investment in you anyone ever will. They raised you.

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Always coming up short when you’re out. Never paying their fair share. What do you do when you’re always covering? Read More...

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Casey Bond

We’ve all had that friend. You know the one.

When the dinner bill comes, they severely underestimate their share (let alone account for tax and tip). You spot them $10 here and $20 there — and they always “forget” to pay you back.

But you let it slide every time. After all, what’s a few bucks among good friends?

That used to be your attitude.

Lately, your desire for a person’s company has a perfect negative correlation to how much of their crap you are required to put up with. You are, in fact, too old for this shit.

You’d like to stay friends with your broke friend, but it seems like an almost impossible task. If you want to maintain the friendship, it will take a little work. And maybe a couple of drastic measures.

Here’s how to deal with that friend who makes you feel more like a bank than their buddy — without killing the relationship.

Be honest.

The great thing about friends (real friends — not the people you pretend to like out of various social obligations) is that you can tell them the truth and they’ll still be your friend. A true friend gets that sometimes you say and do things out of tough love.

You’re not doing anyone any favors by pretending your pal’s poor money etiquette doesn’t bother you. Besides, leaving those feelings festering just creates an uncomfortable situation for everyone. Your friends can sense your displeasure.

So the next time they leave you hanging with the bill, be up front and tell them how much they owe right then and there. Clear the air.

Add that you’re pretty strapped for cash as well and can’t afford to cover them. Consistently push back rather than ignore the behavior. Eventually, they’ll get it and stop mooching all the time.

And if this honesty does cause a rift in your relationship, it’s probably time to reevaluate whether you two shared a real friendship at all. No one likes being the ATM all the time.

Find cheap or free things to do.

A novel idea, right?

As much as you’re annoyed by your pal’s perpetual brokeness, they likely feel pressured to keep up with the group financially, too. After all, if your group is always going out, the FOMO is real for you — and for your annoying broke friend.

That’s a tough spot to be in. As a friend, though, you can be part of the solution. Find ways to spend quality time together that don’t force your buddy into yet another awkward situation. There’s no reason to hit the clubs every weekend or go out to expensive restaurants.

Besides, one of the best things about friends is that all you really need is each other’s company to have an awesome time.

Check your local weekly for low-cost and free events such as concerts, art exhibits, and movie screenings. Have a picnic at the beach (or in the park). Go for a hike. Get dressed up, pretend you’re rich, and hop from one open house to the next while eating all their snacks along the way.

Or, just have a chill evening at home, playing games and laughing.

No matter what you do, the important thing is that you have fun together — without spending a ton of money. Once you start getting creative about these types of activities, it’s easy to have a good time without breaking the bank.

Consider it a gift.

When your friend does ask for money, and you feel comfortable parting with the cash, treat it as a gift.

Loaning money turns a personal relationship into one of business, which opens the door for guilt and resentment on both sides — especially if the borrower isn’t able to pay up.

When you loan money, things get weird. Often, it’s better to just consider it a gift. Or, take turns paying for each other. However, if your broke friend can’t (or won’t) take a rightful turn, that can get just as ugly. When you give money to someone you are pretty sure won’t pay you back, just think of it as money gone and move on.

Bottom line.

It’s your choice whether or not you want to support your friend financially — and it’s perfectly fine if you do.

Keep in mind, however, that you can’t expect things to change if you continue to enable the situation. If your friend starts to rely on you, and the situation suddenly changes, you could be doing your friend a huge disservice. It’s vital to think through the implications.

Friendship is something that only becomes more precious as you grow older. As you watch your time with friends dwindle, you might worry that soon there will be no one left. As a result, it can be tempting to over-compromise in order to avoid conflict.

But true friendship is also built on honesty and desire to make each other happy. It’s a relationship that involves give and take. If you’re always the giver, it can get old fast. So don’t be afraid to share your feelings in a caring but straightforward manner if things are becoming unbearable.

Besides, you also have to think of your own money situation. At some point, you need to stop sacrificing your own well-being on behalf of someone who offers nothing in return. If your own financial goals are jeopardized in order to keep the peace between you and a broke friend, that friendship probably isn’t worth it in the first place.

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If you MUST lend money to friends and family, try to keep these 7 essential tips in mind. Read More...

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Zina Kumok

The common advice about lending money to friends and family is pretty straightforward: don’t do it. It’s generally said that if you’re going to give away money to the people you care about, it should be in the form of a gift. The expectation of repayment can lead to resentment, guilt and the general dissolution of relationships — so why expect anything at all?

But unfortunately, real life isn’t always so straightforward. Sometimes a friend or family member desperately needs financial assistance, and the amount they need is just too much to part with permanently. It may not be an ideal situation, but it’s common enough to warrant discussion.

So how do you go through the fire of money lending and come out the other side with your relationships still intact?

1. Don’t let it affect your credit. It’s one thing to loan your sister $500, but it’s another to cosign on her car loan. Cosigning means you could become responsible for her debt if she fails to pay it. No matter how much you trust someone, this is a huge risk to take — especially if you can’t afford to pay off a $20,000 Toyota. Your credit score can also take a hit if they fail to make their payments in a timely fashion.

2. Write it down. Miscommunication can turn a friendly loan into a relationship killer. What your brother considers to be timely repayment could be completely different from the time frame you’re expecting to wait. That’s why it helps to write the details out, so everyone is clear about the terms of the loan. You can also set up late fees so they have incentive to pay you back on time instead of a few days after the fact.

3. Keep a record of the repayment. If your friend or family member sets up a repayment schedule with you, find an online method to track how they’re paying you back. Splitwise is a great option, but there are plenty of other sharing and debt tracking services. This way, there’s concrete proof that each payment has been made. This is easier than getting separate checks in the mail or random amounts of cash.

4. Find out what the loan is for. Just like a bank wouldn’t loan you money without a stated purpose, don’t give your loved one money just because they ask for it. Maybe they want money to invest in what seems like a scam or a legitimate business venture – you won’t know until you find out. Plus, if they have to explain their reason to you, it may help them come to a better understanding of how reasonable their request is.

5. Discuss it with your partner. If you share finances with someone else, you should get their approval before you lend someone else money. Being on the same page will ensure that you don’t ruin your relationship with them as well as the person you’re lending money to.

6. Let them know they can talk to you. If you set a hard deadline and your friend can’t come up with the money by then, they may feel too embarrassed to talk to you about it. Don’t be a pushover, but let them know you’ll be flexible. This can make it easier to preserve your relationship, and your friend or family member won’t feel the need to give you the silent treatment out of embarrassment or fear.

7. Don’t turn the loan into a gift. While there are exceptions to this rule, you generally don’t want to change the nature of the transaction after the details are set. It may be preferable to give a gift rather than a loan, but voiding your right to repayment after the loan has been given can make you look like a pushover — and could lead to you resenting the person you’re giving the money to. No matter what you do, make sure your decision isn’t heavily influenced by a pushy friend or relative.

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