Rules To Live By When Lending Money To Friends And Family

Most of us have lent money to a friend or family member or paid a group bill with the expectation of being paid back. Unfortunately, these situations don’t always go smoothly and often result in lost money or hurt feelings — sometimes both.

About seven in 10 U.S. adults (70 percent) have lent money or footed a group expense with the expectation of being reimbursed, according to Bankrate’s 2025 Financial Taboos Survey. More than half of them (55 percent) have experienced at least one negative consequence, including lost money (44 percent), a damaged relationship (26 percent) and a lower credit score (7 percent). About 4 percent even got into a physical altercation.

Talking about money can be tricky. Bankrate’s survey found that substantially more Americans would rather talk about their political positions, religious views and weight than money topics such as their bank account balances, credit card debt and salaries. But being able to discuss money is key, especially when it comes to lending money or paying your fair share of the group meal or travel expenses.

Have a question about personal finance? E-mail me at ted.rossman@bankrate.com and I’d be happy to help.

Setting expectations is crucial

Lending and borrowing money is more likely to go awry when expectations are unclear. For example, if you spotted your friend $100 for concert tickets or to help him bridge the gap until the next payday, was that a gift or did you expect to be paid back? What about when you pay your group’s bar tab. Were you being nice and treating your friends or were you assuming everyone would Venmo you their fair share?

If you’re expecting reimbursement, be clear and direct about your expectations. For example, text the group: “Just reserved our rental house for Ben’s wedding. Can you each send me $300?” Peer-to-peer payments services such as Venmo and Zelle are an easy way to send and request money from friends and family. Since the likelihood of getting paid back fades over time, act quickly. You could use one of these platforms to request payment from your friends before you leave the restaurant or in the Uber on the way home.

A potentially thornier situation is when a friend or family member asks you for a loan. If they lost their job or are struggling with another issue, you may want to help, and it’s hard to say no. Ensure they recognize your help for what it is — a loan that you expect to be repaid. It may sound unnecessarily formal, but there’s nothing wrong with putting the expectation in writing and both signing it.

It’s OK to say no

As is usually the case, honesty is the best policy. If you’re truly not in a position to help monetarily, just say that. I’ve even heard of people turning the request around with a quip like, “That’s funny, I’m running low on funds myself and was about to ask you for a loan!”

You could potentially offer to help in a different way, depending on the need. Maybe you could offer advice or connections to potential employers. Perhaps you wouldn’t mind your friend or adult child sleeping in your guest room for a period of time. You may not be comfortable with an open-ended loan, but maybe you’re willing to offer specific assistance, like groceries or access to a shared cell phone plan.

Be clear-headed about the circumstances

How to respond to a request for financial assistance depends on your relationship with the person, their specific request and your respective means. But remember that it’s OK to say no.

Often, any help you give is best framed as a gift anyway, which keeps the expectation of repayment from hanging over both of you like a dark cloud. No one wants to sit down to Thanksgiving dinner with their banker or debtor. What if your brother-in-law owes you $1,000 that he never seems to have, yet he keeps going on and on about the fancy vacation he just took or the expensive flat-screen TV he just bought?

Remember:

1. It’s OK to say no, perhaps offering to help in a different way.

2. If you’re going to help, consider making the support a gift without the expectation of being paid back.

3. Only offer money you’re prepared to lose; as they say during airplane safety demonstrations, put on your oxygen mask before helping others.

We’re headed into the holiday season, and this is a popular time of year for friends and family to ask for financial favors. Before you get cornered at the Thanksgiving buffet or under the mistletoe, plot out a strategy. You might even say, “I value our relationship too much to taint it with money. Can I help in a different way?”

When adult children ask for help

It’s especially hard to say no when it’s an adult child who needs assistance. And I’m not saying you need to be a cold-hearted Scrooge. You can certainly offer help (just don’t count on getting the money back). But especially with adult children, there are age-appropriate ways to help that can build toward independence and serve as a launching pad. After all, one of a parent’s main jobs is to prepare their children to live on their own at some point.

These days, that timeline is often being pushed back. The Census Bureau reports that in 2024, most 18-24 year-olds (57 percent) lived in their parental home. By ages 25 to 34, that dropped to a still significant 16 percent (about 1 in 6).

I empathize with high housing costs, student loans and other financial burdens that are making it harder for young adults to live independently. But living with Mom and Dad shouldn’t last forever. This is the kind of financial support that should have an end date in mind.

You could ask adult children contribute to household expenses such as groceries, utilities and cell phone plans. This isn’t meant to gouge them, but rather, as a practical measure with the added benefit of not letting them get too comfortable. Parents could even consider setting aside some or all of this money as a “freedom fund” of sorts. It could serve as the foundation for a future apartment rental or home purchase (as some or all of the security deposit, furnishing costs, down payment, etc.).

It might even make sense to dial up this amount over time, to spur progress toward moving out and moving on. I’d much rather see parents have their adult children move in with them, as opposed to making rent or mortgage payments for them to live elsewhere. It’s best to work on a path to independence, not an indefinite handout. It’s important to set expectations and work toward a viable long-term solution for all.

The bottom line

It’s nice to help friends and family members in need, but don’t put your own financial well-being at risk. There are other ways to offer support. And there is such a thing as too much help, especially when it crosses the line to enabling a failure to launch.

Whether you’re paying for a group expense or aiding someone through a rough patch, communication is key. Be intentional about what you’re offering and whether you expect repayment.