Should I lend money to family?

Generosity is a virtue, and like every virtue it lies between two faults. On one side is meanness, the man who counts every coin and cannot bear to part with any. On the other is wastefulness, the man who gives to anyone who asks until he has nothing left to give to those who deserve it. Neither is admirable. The generous person gives to the right people, in the right amounts, at the right time, and does it gladly rather than with a pained face.nnFamily are among the right people. We owe more to those who gave us life and grew up beside us than to strangers, and a person who will help a stranger but not his own brother has his priorities upside down. So your instinct to help is sound.nnBut look at the amount and the time. Do not give what you cannot spare, because then you will resent it, and resentment poisons the very friendship the gift was meant to honour. Do not give to someone who will waste it, because then you are not being generous, you are feeding a fault.nnMy practical advice is this. Decide what you could hand over and never think about again. Give that, and call it a gift. If you call it a loan when you both suspect it will not return, you are setting a trap for the friendship: every family dinner afterwards will have an unpaid debt sitting at the table. A gift ends the matter. A doubtful loan keeps it open for years.

I made my living from thrift and preached it in a little almanac for a quarter of a century, so you will not be surprised that I take money seriously. But I am no enemy of lending. When I came to write my will, I left a sum to Boston and another to Philadelphia to be lent out to young married tradesmen at modest interest, so they could set up in business. A loan, properly made, is one of the most useful things one person can do for another.nnProperly made is the point. A loan to family fails for the same reasons any loan fails: it is too large, its terms are vague, and nobody writes anything down because writing things down feels unfriendly. That embarrassment is what ruins families, not the money.nnSo here is my method. Lend only what you could afford to lose, since that is sometimes what happens. Agree an amount, a schedule and a date, and put it on paper with both your names. Not because you distrust them, but because memory is generous to the borrower and stingy to the lender, and a page settles arguments before they start. Ask what the money is for, and whether it will put them on their feet or only postpone the next request.nnIf they will not agree to plain terms, you have learned something useful for the price of a conversation. If they will, you have helped someone stand up, which is worth a great deal more than the interest.

When I wanted an example of a promise that cannot be made honestly, I chose exactly your case: a man in need asks to borrow money, promising to repay it, knowing perfectly well that he never will. Could he will that everyone in need should make such promises? No. If they did, promises would mean nothing and nobody would lend. The false promise destroys the very practice it relies on.nnSo look first at the promise being offered. If your relative means to repay and has some real prospect of doing so, the loan is an honest agreement between two responsible people, and you may make it with a clear conscience. If you both know the promise is empty, then you are being asked to take part in a pretence, and so are they. That is beneath both of you.nnNotice what follows. Respecting someone means treating them as able to keep their word and as answerable when they do not. To lend while quietly assuming they will fail is not kindness; it treats them as a child to be managed rather than an adult to be trusted. Better to say plainly: I can give you this much, and I do not want it back. Or: I can lend this, on these terms, and I will hold you to them.nnYou have a duty to help others, but it is a broad one, and it leaves you room to choose how and how much. You have no duty to help by means of a lie.