Should you lend money to a friend? Here's how to decide

School’s over for the day, and you and a friend stop for a quick snack. You’re standing in line, about to pay, and they go, “Ugh, I forgot my wallet.” So you pay for their food. No big deal, right?

Then the same thing happens next week. You're out with the same friend, and they forgot their wallet again. Instead of automatically covering for them, you pause. Do you lend them money again, or does this feel like it's becoming a pattern?

Let’s figure out how to decide and how to keep your friendship solid, even if you don’t lend them the money.

Why lending money to friends can be tricky

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You care about your friends. If one of them needs help, it’s natural to want to step up. But lending a friend money isn’t the same as sharing an order of fries. When there's money involved, things get a little more complicated. This could mean anything from expectations or deadlines as to when the money should be paid back. Plus, it’s easy for emotions to be involved — especially if your friend forgets to pay you back (or acts like they never borrowed it in the first place)! What was supposed to be a nice gesture can end up hurting your friendship.

4 questions to ask before you lend the money

Give yourself a second to think it through before you say yes. These questions can help you figure out what’s right for you:

1. When are they going to pay me back? Even if it’s just five bucks, it’s worth asking when you’ll get the money back. Are they thinking they’ll repay you tomorrow? Friday? Sometime next month? “Soon” can mean totally different things to different people, so it’s better to ask than assume.

2. What if they never pay me back? Would you be short on lunch money or have to skip getting something you’ve been saving up for? And, how would you feel about that? Some people can shrug it off, but others end up feeling bad about it. It’s good to know before saying yes.

3. Is this an emergency? Do they need help right now (like for school lunch or a last-minute ride home)? Or is it for something that really doesn’t seem that important? There’s a big difference between helping someone out in a crisis and constantly being someone’s go-to for extra spending money.

4. Is this starting to become an ongoing thing? Asking one time is likely OK. But if they’re always asking, that’s something to pay attention to. You might need to draw the line — not in a mean way, but just so you’re not stuck in a pattern that doesn’t feel fair.

How to say yes and be clear on the terms

It’s totally OK to talk about the terms of a loan, even with close friends. If you just hand over the money and hope for the best, chances are you will be left wondering when they'll actually pay you back. Try something like, “Yeah, I can cover you, but I need it back by Friday,” or “I can do it this time, but I can’t keep doing it.”

Being upfront doesn’t make you a bad friend. It just means you’re taking care of yourself, too. It might feel a little weird, so sometimes it helps to explain why you're saying no. Are you saving up for something or just trying not to blow your budget? Or, do you just not have the money? One quick explanation now is better than dealing with potential awkwardness later.

How to say no and still be a good friend

Saying no doesn’t mean you don’t care about your friend. It just means you’re being real with them (and with yourself!). You’re allowed to protect your own feelings and your own bank account. Here are a few ways to say no:

• “I really want to help, but I need to stick to a budget right now.”

• “I’m not in a spot where I can lend money today, but maybe I can next week.”

• “I really don’t want to mix money and friendships.”

• “I care about you, but I’m just not comfortable lending money.”

Saying no doesn’t make you a bad friend. And maybe there’s another way you can help. Maybe they always seem to be short on spending money, and you can help them figure out if they can get a part-time job or even sell stuff they don’t really use anymore. If you have a few tricks that you use to stretch your budget, you can share those, too.

If they’re asking to borrow money just to go out, you can always suggest doing something that doesn’t cost any money. You can hang out at your place, stream a movie, go for a walk, whatever. Spending time together can sometimes matter more than whatever they were planning to spend the money on.

So, should you lend money to a friend?

It honestly depends on the situation, your relationship, and on how you’ll feel if things don’t go as planned. Lending money can be a very kind and generous thing to do, but it’s not the only way to show up for someone.

If you can afford it, you trust them, and you’re OK with the chance you might not get it back, maybe lending your friend the money makes sense. But if it’s going to stress you out, make things weird between you, or throw off your own budget, it’s totally OK to not lend your friend money.

Being a good friend doesn’t mean saying yes to everything. Sometimes part of being a good friend is being honest, and finding other ways to support them that don’t put you in a tough spot.

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