How Lending Money to Friends Cost Me Friendships: Can Management Techniques Help?

Hi,

I have known this English proverb for quite some time. However, I always end up facing the same type of problems. I am confused when it comes to handling these issues. I have tried to reduce the frequency of lending money to others, but I still find myself encountering similar situations.

When a friend is in need, how can you say NO to them when you have enough money in your account? Can I apply management techniques to maintain these relationships? And if so, what kind of relationship would that be? I have been successful in recovering outstanding debts for my company, but not for myself.

I had two good friends in Coimbatore (TN), Mani and Raja (not their real names). Raja was my colleague. One day, to my surprise, he was terminated from our company. Despite there being more than 25 employees in our office, nobody had the courage to talk to him after his termination, except for me and another mutual friend.

I visited his house the same evening and was saddened to see his wife and two children. Their parents and relatives were not on good terms with them due to their inter-religious marriage. I advised Raja to meet with job consultants in the city and some of my friends working in other companies. I also helped him improve his CV before leaving.

The next morning, he called me asking for Rs 2,000, promising to repay me within a week. However, to this day (since May 2003), I have not received the money back. When my wife was in the hospital for delivery, I called him for the money, but he did not return my call as promised. I lost contact with him and do not know where he is or how he is doing now. I lost a good friend.

Mani was another friend of mine whom I used to visit frequently when I felt demotivated. He was full of energy and confidence, working as a marketing freelancer in Coimbatore. One day, he invited me to his office, which was located in a small building he owned. His wife ran a private clinic in one part while the other part served as his office. I noticed a whiteboard with various companies' names and bank names, along with amounts and dates. The total amount was around Rs 1,40,000. I assumed these were his commitments for the month, a method he used to remind and motivate himself.

The following morning, he called me asking for Rs 5,000, promising to repay me in a couple of days. At that time, I had around Rs 30,000 in my account, borrowed as a personal loan from ICICI Bank. It was difficult for me to refuse him in that situation. Despite my loan installment being completed over a year ago, I have not received the money back. Unfortunately, I lost another friend.

"I do not lend money to anybody under any circumstance."

I want to share two related stories of mine. Following the first and second incidents, I have never lent money to anyone again.

When I started working in 2000, earning a monthly income of Rs 4,000, I interacted with various people at my workplace, including an office boy named Victor. He was married, and his wife was expecting their second child. Victor often spoke about his financial struggles and mounting bills. One day, he approached me, requesting about Rs 1,000, promising to repay Rs 100 monthly. He mentioned his mother's hospitalization and operation, seeking urgent financial help. I kept his request confidential, as he had asked. However, later, another person informed me that the company had already provided Victor with Rs 5,000 cash and covered the entire cost of his mother's treatment. When I asked Victor to return the money, he dismissed my request, claiming that the amount was insignificant to me compared to my husband's income. Despite my efforts to retrieve the money, he never repaid me. Sadly, I eventually stopped pursuing it.

After this experience, I lent Rs 5,000 to a colleague facing financial difficulties. Later that month, he received a raise from the boss and left without informing me. He relocated to Pune, leaving the debt unpaid. Since these incidents, I have decided not to lend money to anyone under any circumstance.

Regards,

8)

Sad incidents.

I am just thinking if there is a situation wherein we are forced to ask one of our best friends to lend some money and if he doesn't give us, then what will be our reaction? If we know for sure that the person has sufficient money and can afford to lend us the money we asked. I am sure we would slowly stop that relationship too. I am reminded of a quote, "A friend in need is a friend indeed." Either we lend it or not lend it, still, we would lose a friend. What a pity!

One thing we can do is if we have to ask someone for some money (whatever amount it can be), we should make sure we return it on time, thereby making him realize the fact that NOT ALL PEOPLE ARE LIKE MANI, RAJA, etc., in the story. I am not sure; maybe I could be right or I could be wrong. A good thought to ponder upon ARV.

Regards, ~Raghav V

I really don't know what to say. There are so many things coming to my mind, but I don't know which one to put and how. Many people, after reading your story, would feel pity; many will feel you are a fool, and others will feel that you have been a victim, etc. They are all right in their own way. I have mixed feelings for you. I think you may be very naive and a person who jumps at every opportunity to help people. People may perceive you as a very soft person, and that's why they make you an easy target.

You see, the world is full of people who are ready to desert you once they find the right opportunity, and we call them our friends. Even I have faced a couple of problems. When I started my career, my friends were already earning double than me. But still, whenever we used to go out for lunch or dinner, I ended up paying. It was happening more and more. Then I introspected and found that I have always jumped at opportunities to show my friends that I care. Now, I balance it and feel happy about it.

So, either I can act like a god and say, "Okay, I will solve your problem," or I can give them a patient hearing and say, "Try to take some loan from the bank. I can understand your problem. It's a great difficulty; you should not take it lightly. Try talking to people who can give you loans. If I had the money, I would have definitely given it to you, but unfortunately, I don't have."

There is some more talking in the second part, but you diplomatically answer the query, show concern, and do not pay.

Try to be more firm in your decisions and values.

Regards,

Anuradha

Hi!

I would also like to share the same.

Three years ago, one of my childhood friends called me on my cell and asked me if his wife was reaching Varanasi by tomorrow morning. He had forgotten to give her money for pocket expenses. So, he requested me to give Rs.3000/- to his wife at Varanasi Platform, promising to transfer the money to my account. As they say, 'a friend in need is a friend indeed,' I went to the platform and first tried to find his wife because I did not know her and had no introduction to her as they were newly married. I gave her Rs.3000/-. However, since then, he has not been answering my calls or returning a single rupee. Even during times of crisis, such as my sister's marriage or my father's bypass surgery, I have tried to contact him through mutual friends, but he has not responded. It has been a very bad experience for me, losing both money and a friend.

Even after this incident, I continue to lend money to my office staff, expecting that the amount will not be returned. However, every time I lend money to them, they return it on time or with a slight delay. Perhaps it is because they work under me.

I hope not everyone is like my deceitful friend. So, let's always try to help!

Rahul

Hi Hiren,

"I do not lend money to anybody under any circumstance" - your decision is after your experiences, so fix it in your mind and remember whenever anyone asks for money.

Similar experiences have been seen with a number of persons. It happens that the friend, being close to you, knows your living style and savings. Many times, he/she takes advantage of the situation and your nature. You feel pity for a friend and lend money. Using the same money, your friend may be enjoying or investing money to increase his health and wealth, which you avoid just to increase your savings.

Please keep in mind, your savings are your hard-earned money and you are the owner. Let not others be a decision-maker of the way of spending it. There are ways to say NO... say I have a plan in the near future where I will need more money (better not to disclose what the plan is), show that you are badly in need of money for your plan... the plan may be anything like the purchase of property, vehicle, or for investment dues/assurance to the other party. Do not bother if your friend understands/feels that you speak a lie/bluff. Do not worry about friendship if friendship is meant only for money (i.e. one-sided sharing of your money). It is better not to have such friends, and you will have a better sleep at night.

It is also true that all people are not the same. The major question is how to know the person. So at some moments, if you lend money, (1) do not lend a higher amount, (2) Give Rs.500/- if asked for Rs.5000/- and forget it considering it a donation.

This is true for your relatives... the close relatives also, for whom you cannot say anything to anyone.

Be BOLD enough to say NO for money, and once you lend money, consider it a donation rather than spending sleepless nights.

Regards,

Hiren

Dear friends,

I agree with the subject matter and have also had such an experience, which resulted in the loss of one of my friends. However, as it has already been quoted, "A friend in need is a friend indeed." So, what should we do in these circumstances when one of our best friends asks for help? Shouldn't we help him/her when our friend is in a difficult situation?

Please discuss and comment on its solution as well.

Regards,
Khalid

Hi,

Greetings,

I saw your article about lending money. I have also lent money to friends and have not gotten it back. I felt frustrated. My dad is a staunch believer in the Geetha and once told me that the left hand should not know what the right hand gives, meaning not to expect it back. However, is it possible to live life that way in the present situation?

I pondered over it and came up with a solution while also compromising with what the Geetha says. One day, a friend of mine asked for a loan of 7000 Rs and promised to return it in a week's time. You know what I did? I could afford to give 2000, not expecting it back, thinking of it as going to charity rather than 7000. So, I informed him that all I could give was 2000, and he had to arrange the rest himself and pay me back when he could. Even if he doesn't pay me back, it won't hurt me as I had already decided that I was making a charitable donation. If he does pay back, then that's a bonus.

This method has worked out very well for me, and you all can try it too.

In some situations where you cannot afford to lend that money, be frank and say no, you don't have that kind of money to lend.

I agree that we should help people who are really in need, but at the same time, we should keep one thing in mind. With easy availability of loans, people can arrange to avail a loan from the bank or any financial institution. If it is in the case of a best friend (always remember best friends are not friends whom you know for 3 years or at the workplace... you may be close to that person but do you really know the ins and outs of the person. Would you be able to predict his behavior in one particular situation?) If yes, then you may lend money to that person. If you know if he is really honest (you may have come across a situation where he has reacted in a certain way), on that basis, you may make a decision unless it is so bad that the person is not able to arrange for a loan.

Gattu - You can afford to pay Rs. 2000 and do not expect them back and still think of it as charity. Would like to be your friend 😉😉

After seeing many replies, I feel many are feeling the same. Helpless, Clueless, etc. Everyone is more worried about losing a friend than the money. I really like it. Human relations are placed at a higher value than Money. We are trying to give as much as we can without affecting the relationships. We need to feel proud about us. But still, there is no proper solution for this. We cannot afford to keep losing money or friends. Let us see for more replies to gather inputs from Seniors.

Regards,
~Raghav V

Well, I believe also the same now that there is no solution to this problem except this:

" The amount of money which you can afford to give as charity or even if it goes away and does not affect you, then that much amount should be given. After all, he is your friend, so some help should be done."

Otherwise, we'll lose our friend. I still remember my friend whom I lost just because of this reason, and now I want to contact him by conveying to him that if he is not paying me the money, then no problem (as I have already lost it), but I must not lose you, my friend.

This is the best way and solution to this problem, in my opinion. If anyone has another solution, please discuss.

Regards, Khalid

Hi Arv,

After reading your post, I am a bit speechless. It is very difficult to comment on whether lending is good or bad, but I would like to say one thing - money can spoil relationships, whether between friends or relatives. However, it is important to remember that a friend in need is a friend indeed. At the same time, you need to be observant about your dealings with people. Remember, you are not the RBI, so you can't keep lending to everybody all the time.

Arv, just keep one thing in mind - whenever you want to lend money to someone, you should know their status in the office. By status, I mean you should reach out to people and ask if it is their routine to ask for money. If someone is asking you for money, ask yourself, "Why me?"

A similar incident happened with my parents, and they had to bear a loss of not less than ₹80,000. They lent money to one of their friends, who later conveniently forgot and said, "You are misunderstanding." At that time, we felt that even while lending money, one should always get a receipt.

But sometimes, you can't do anything. What ought to happen will happen!

Dear Khalid,

I would like to put forth one point: You have mentioned that you lost your friend for this reason. But tell me one thing, does he consider you a true friend? If he truly did, he would come back and at least ask for you or try to contact you. I agree that human relationships are more important than money, but when someone truly values your help in their time of need, how can we consider them a friend? Are they really worth being called a friend? Do think about it.

Regards,
AS

Well, dear,

I think that sometimes a person becomes too shy about their own behavior that they don't have the courage to face others. Similarly, I believe that he is probably in that kind of situation, which is why he is not contacting me. After all, he was one of my best friends, and we have spent excellent time together.

Another thing is that if I contact him myself and tell him that we won't ever discuss this topic again, so forget it, I think by doing this, I will not lose my respect; instead, it shows a person's care for others. And thus, I'll have my friend back.

But remember, everyone has some weaknesses, so when making a friend, create a space to acknowledge and accept all of their bad qualities and habits. This is the only way to continue with this relationship.

Regards,

Khalid

I do have the same problems. When I am faced this situation no matter how hard I try I just can't say “No”, which is one of the most bad qualities to have unfortunately. But my mother keeps reminding me, “Lending money will make you loose both your money and your friend” but that just remains a hard struck advice which I can't stick by to!! :(
But what is worse in my case is I do not even have the courage to ask it back from the person I leant it to. I just keep postponing or telling my self that if the person is able to, in time he/she will return which almost always never happens. :oops:
But whenever I read something or hear something like this, I tell myself to try harder!!

Hi there,

Sad stories... but in my point of view, we have to set aside some money from our income for charity in light of these occurrences. If we receive the money back, we should not use it but keep it ready to give away again for similar situations. If we don't get it back, then we should save some more money and be prepared for such circumstances. Make a budget regularly, whether small or big.

The moral of the statement is that life is unpredictable, and challenges will arise repeatedly. You can contribute less money than the required amount if you believe it won't be returned to you or if you urgently need extra funds for your future. If you later discover that a friend is deceiving you, have the courage to confront them and defend your honor.

Don't close the door if someone approaches you, whether a friend, relative, or stranger. Regardless of any negative experiences you may have had, remember that not all the money you possess is truly yours; you may have to part with it.

You all seem to be kind-hearted individuals with unfortunate experiences, but I urge you not to cease lending money. You can alter the way you lend it, but please do not stop.

Vishwas

Ok, all of you say that if you lend the money, you might end up losing both. But even if you don't lend the money, you might still end up losing the friend. And then you might feel, "Oh, I should have lent the money." Compared to the friend, the money is not that important. Ah... really confusing and conflicting! 😛

Please let me know if you need any further assistance.

Who the hell are you to tell me, "don't bark"? You can express your views without being confusing or aggressive. Is this the way you choose to communicate your opinions?

Friends,

Let's not lose our cool (friendship) over lending money 😉. If you are not interested in the topic, you can always ignore responding to it. People who feel like responding will continue to do so.

Be cool and relaxed. We are all professionals. Everyone knows it, and everyone accepts it.

Regards,
~Raghav V