Everyone has that someone in their family or circle of close friends.  You know, the guy ( or gal ) who is always looking to borrow some cash.  I can see you nodding your head.  Whether it’s your brother, sister-in-law, great uncle, best friend from grade school or whatever, there’s always someone who needs some cash.  And being the financially responsible individual that you must be ( after all, you are a Llama Money reader ), you get to be the one who’s always hit up for a loan.

Never loan money to family

Never.  Not a single time.  If a relative is in a tough spot and asks for some cash, don’t lend him or her a dime.  Provided that your financial situation allows you to do so, give them the money instead.  If you want, you can call it a loan.   That way there’s a chance that you might see the money again.  But deep down, treat it like a gift, and don’t ever expect to see a dime back.  Chances are, you will only end up disappointed if you treat it like a loan.

Forget all that ‘put it in writing’ nonsense

Have you ever tried to sit down and write out a loan contract with your brother?  Not going to happen.  You’re not a lawyer, and he’s not going to appreciate how this goes.  Not only is he in a tough spot by having to ask you for cash, now you’re making him sign a contract.  Don’t bother – a loan to family is doomed to fail.  Too much stress, pressure, awkwardness, and annoyance.

If you can’t afford to give them a gift, just say no

No loans, only gifts with family.  If your situation doesn’t allow room for a financial gift ( even a small one ), just say so.  You know your finances better than anyone else in the world, so you know what you can and can’t afford.  Don’t be guilted into giving money when you really can’t afford it.

Remember, it’s family

At the end of the day, taking care of your family is important.  If kid are going to go hungry if you don’t help out, then you probably need to find a way to help.  Yes, giving money to family is expensive, and yes, it can be annoying.  But you only have one family, so sometimes you have to do the right thing, even if it’s not the right money thing.