Should I lend Money to my Children?
It can be a big dilemma when you are a parent and you are not sure whether you should lend your children money or not. Situations can all be very different and many parents may just not have the money to lend and some children may never need extra money. However, there may be a time, as a parent that your child does ask for money and you will need to think about how to deal with it.
Do you have the money?
Obviously the first thing that you will need to think about is whether you have the money to lend them. Sure, you could take out a payday loan without a credit check and you may feel that you really need to help them out as they are your child and so you should do everything that you can to help them. It may put you in a difficult situation though. If you have to sell things to provide the money or go without yourself, it could make things tight for you. Make sure that you will not need the money yourself. Think about the sorts of things that you might need to buy and whether you should keep some money back so that you can afford those things. You may be wise not to use up all of your savings, just in case you do not get the money back or in case you need it before it is paid back.
How will they pay you back?
You need to have a think about how they will pay you back. It might be wise to have a formal agreement so that you do not have any chance of falling out over the repayments. You could think about the amount that they could afford to repay and so it could just be a small amount but if they were at least paying something regularly, you would have more chance of getting the money back. You will also need to agree with them whether they will pay you any interest on the money that they have borrowed. This might initially seem rather unfair but if the money was in the bank the parent would be getting interest, so maybe the child should repay that, which could still a lot cheaper than the costs of a loan.
How will their siblings feel?
If you have more than one child, then it is important to think about what their siblings might think about you lending the money. They might I is unfair and they might even want some for themselves and ask you for some. This could be a problem if you do not have enough money to lend to all of your children. It may affect your relationship with those other children. They may also get jealous of each other and it could affect their relationship with one another as well. Some people do tend to get jealous and others do not, it can be down to whether they are used to being treated the same and so if one suddenly gets treated differently this can cause jealously. It may be that they just have a jealous personality and you are likely to be aware of this and should make sure that it does not become a problem.
Will you manage financially if they cannot pay?
It is worth imagining what might happen if they cannot pay you the money back. It might be that their financial situation gets worse and worse and they have nothing to repay you with. This is something you need to imagine, even if you do not think that it will happen. This is because you need to ensure that you will be able to manage financially even if you are not getting any repayments on that loan. It can be hard to know for sure, but think about things that you may need to buy in the future and whether you think that you will have enough money to be able to afford them.
What will you do if they cannot pay?
If they miss a repayment or say that they will never be able to repay the loan, how will you manage? It is worth not only thinking about how you will manage financially but also how you will feel towards your child if they did that. It might be that you will be happy to help them out and not mind at all, however, you might find that you start to resent them, particularly if you wish that you had the money for some reason. You may also need to consider whether you need to even things out with your other children, if you have any. If you write off a loan for one then will you need to give the same money to your other children to make it even and will you have enough money to be able to do this?