Financial expert warns against lending to family, stresses clear expectations and communication

From Yahoo Finance: 2025-06-18 12:30:00

Financial literacy expert Neale Godfrey offers advice on lending money to family and friends to avoid damaging relationships. Just 56% of loans are fully repaid, leading to miscommunication and potential lifetime repercussions. Generational lending and entitlement pose additional risks, with one in four lenders reporting negative impacts and the need for formal repayment plans.

Godfrey emphasizes the importance of setting clear expectations early, discussing repayment terms, interest, and payment frequency. She warns against enabling bad financial habits and suggests creating a budget together to address deeper social issues. Clear communication and caution are essential for preserving relationships and financial well-being.

Creating loan agreements, even among loved ones, is crucial for protecting relationships and avoiding frustrations. The paperwork should outline loan terms, repayment schedule, interest, and any agreed-upon gifts in kind. Caution and clear communication are key to maintaining financial well-being and relationships with family and friends.



Read more at Yahoo Finance: Lending to Loved Ones? Neale Godfrey’s Expert Advice to Protect Your Wallet