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Should You Ever Loan Money to Family?

Short answer to that question: No!

Let me explain.

It’s Christmas, and you’re probably going to spend a little more time than usual around family over the next month or so.

Maybe your Uncle Jim knows you’ve been on the Dave Ramsey plan. You’re out of debt and doing better than ever.

So after Christmas dinner, Uncle Jim approaches you and politely asks if you could loan him $500 to help open his new cupcake shop. He’s always wanted to own a cupcake shop, and he would be “so grateful” if you could just spare a few hundred dollars.

You have three options here.

First option:

You can loan him the money. As a result, your uncle will be in debt to you, and every time you see him from now until he pays that money back will be an awkward experience. Thanksgiving dinner taste different when a family member owes you money.

Second option:

You can politely decline to loan him the money. You might tell him that, even though you’ve been on the Dave Ramsey plan, the budget is still tight because you’re saving, investing, and planning for your kids’ college. There’s absolutely nothing wrong with making that decision.

Third option:

You can just give him the money. Don’t loan it. Give it to him. If you’re out of debt and you have the money, then there’s nothing wrong with blessing your Uncle Jim with a $500 gift. He’ll probably appreciate it more than you’ll ever know, and you might get free cupcakes for a year!

The takeaway is that family and business rarely mix well together. And whenever you loan money to a family member, you’ve become their creditor. You’re more than just family members—you’re now a lender, and they’re a borrower.

With Christmas season here, it’s a great time to bless other people who could use a little push. So, if you can do that financially, then go for it! But don’t put yourself in a hole or stretch your own budget out of some sense of guilt and family responsibility.

Pay off your debts and save for the future, and soon you’ll be able to give away as much as you want!


  • Great article! I like the option breakdown.

  • Sue Woods Stone

    Relatively early in our marriage (before DR) the local river flooded and hardship befell Hubby’s good customer and friend. GW asked if there was any way we would be willing to loan him some money. After prayer, Hubs and I decided on $500. Hubs never mentioned it again, though time and again, GW would say that he’d pay it back soon. Time passed, and we never saw GW again. We were more concerned that we’d lost a friend than the money, and determined THEN we would never loan again. If we have it to give, we will give.

  • CMB

    My mother and father in law loaned us some money during some hard times. We would have missed a couple house payments had they not helped us. They never hung it over us and we had it paid back in full within a couple months. It was a ligesaver to us and always loved them for it and thankful they had the money to help us.n

  • Katherine

    Take it from me (currently paying my parents back). Don’t do it! At the time it felt like a lifesaver as I was also in the midst of a divorce. But it quickly became a burden. They didn’t hassle me or anything, just the opposite telling me to take my time paying it back, that sort of thing. Well that only resulted in me STILL owing them money. It does change the relationship and I hate that there is a monthly balance sheet that at the top reads “mom and dad.” Parents out there, if your child is in need financially AND going through a hard time, just give them something, anything! It doesn’t even matter if its a well written letter stating your support with a $25 gift card to go out to eat. But don’t lean money to your children. It really is a master/slave feeling and not one that I ever will experience again.

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  • Iryssa

    I never give any relatives money unless I can afford to never see it again!! If they want to call it a loan, that’s their business, but for me the money is GONE.