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How to say no if you’re asked to lend money

8 minute read

Saying no to someone who asks to borrow money can be a challenging situation to handle. Whether you agree to do it, or decide you can’t, it’s important to put boundaries in place, and handle it with care and respect.

And turning people down – especially family or friends – can be hard. Money is a touchy subject. So what’s the best way to say no if you’re asked to lend money?

There might be a number of reasons why someone needs to borrow money. It could be for unforeseen expenses, or a big life event like a wedding. It could be because of job loss, or it could be because they want to buy a house and need a deposit. Launching businesses, having kids, or repaying debts… 

And there could be an almost equally diverse number of reasons why you decide you can’t go ahead and lend the money. Whatever your decision, money discussions are often difficult to navigate without people getting emotional. So here are a few pointers for making it a smooth conversation.

Ensure you give yourself time for the decision process

Firstly, whatever you decide, you need to give yourself space to consider the request carefully. Ensure you’re not rushed into anything.

Take the time to listen first, and always ask for time before deciding. Start by expressing sympathy and understanding for their situation. This shows that you care about their predicament, even if you can't help financially.

Be clear about your decision

You don't need to make excuses, but a clear explanation helps. Don’t leave room for misunderstandings down the line, or give any rise to false hope. It might be hard to give an unequivocal ‘no’ but in the long run, it’s better for both parties. Explain you’ve thought about it carefully, and decided you can’t lend the money.

While it's important to be empathetic and kind, you also need to be clear and unwavering in your decision, so make sure you’re sure about your reasoning. Repeating your reasons can help reinforce your stance, which is why it’s important to know your ‘why’ in the first place. Be consistent, and stick to your guns.

Use "I" statements to keep the focus on your perspective and avoid making the other person feel judged, or blamed. For example, "I feel uncomfortable lending money because it could affect our relationship," or “I just don’t have the funds to do this.”

If it feels awkward, practice ahead of time. Think through your response and practice how you'll say it. This can help you feel more confident and prepared when you get there.

What might your reasons be?

In truth, you aren’t obliged to give a reason. If someone asks you for money, and you decide not to give it to them, that’s an answer in itself. But if you would like to explain, in order for the other person to be able to accept the answer fully, there are a few ways to communicate different reasons.

Maybe you don’t have the funds. In which case, be honest about your own financial situation. It's perfectly reasonable to say that you're not in a position to lend money, whether it's due to personal budget constraints, savings goals, or other commitments.

Maybe you don’t believe in mixing money with friends or family. Or you feel it’s a bad risk that could cause arguments later on. You can explain that lending money can complicate relationships and that you prefer to avoid such situations. Communicate your principles clearly: Explain your personal or financial ethics that guide your decisions about lending money. Focus on the importance of your relationship and how you wouldn’t want it to be damaged or affected.

Can you help another way?

Offering alternative forms of help can be a good way to soften the blow, and be supportive in other ways. Sometimes, offering emotional support, advice, or helping them explore other resources can be almost as valuable as lending money. People can become panicked when dealing with financial issues, so signposting and support could really help. Encourage them to consider other avenues for financial assistance, such as loans from financial institutions, community resources, or creating a plan to generate or save money.

A few handy phrases that might be useful

If you find this sort of conversation difficult, it might be useful to have a few phrases lined up so that you’re able to give your decision clearly, without getting caught up in complicated chat. Remember, you are not obliged to lend your money to anyone. So even if it feels hard turning someone down, keep that in mind.

“I can't lend money, but I can help you find other solutions."

"I have a policy of not lending money to family or friends to keep things simple and avoid misunderstandings."

"I allocate my funds to specific purposes and emergencies, and I don't usually lend money outside of that."

"I have my own financial goals and commitments that I need to stick to, so I'm not able to lend money."

"I think it would be more helpful to talk to a financial advisor who can provide you with better guidance."

Dealing with older or adult children:

"I want you to learn how to manage your finances well. Let's discuss ways you can earn or save the money you need."

"I can help you with a plan to save up or find a job, but I won't give you money outright."

Regardless of your financial situation, it's essential to maintain boundaries and make decisions based on your principles and the potential impact on relationships. By being firm but supportive, you can say no to money requests in a respectful and caring manner.

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