Asking your family for money may be a great decision for your finances when borrowing from the bank isn’t possible, but it’s not always easy to ask for help.
Turning to your family may be a faster way to get the money you need in an emergency, but money is a touchy subject.
If you aren’t sure how to get the conversation started, check out this list of dos and don’ts. They set out a guideline of best practices to ensure everyone’s happy with a family loan.
DON’T Go Without a Contact
One of the biggest benefits of borrowing money from family is that they’re family and not a financial institution. Unlike a financial institution, they probably won’t ask you to fill out an application or check your credit.
Skipping over some of these formalities may speed up the process, but you should consider drawing up a contract anyway.
It doesn’t have to be as official as an agreement you would sign with a financial institution, but it should outline everyone’s expectations and responsibilities clearly.
There’s no harm in being too detailed here. It’s better to hash out the nuts and bolts of your arrangement before any money exchanges hands, so everyone knows what’s expected of them.
Use this checklist of questions to guide you through this task:
- How and when will you pay back your loan? Will it be installments or one lump sum?
- Does your budget have enough space to cover these payments?
- Does the bank of mom and dad apply interest, fees, or other charges on their loans?
- What’s your family’s recourse in case something prevents you from paying?
DO Understand Their Side of the Deal
When it comes to borrowing money under a time crunch, your priority is paying your bills. That urgency may blind you to other people’s concerns about lending money.
It’s easy to forget that even family may not care about your finances as much as you do. They may not even understand why you need money.
This is a major disconnect between you and your family. It’s important to remember they may not know all the facts that you take for granted. All they know is that you’re asking them to put their savings on the line.
You probably have every intention of paying them back, but emergencies happen, and your family risks their finances if you can’t pay them back.
Seeing this arrangement from their side may help you tweak your demands, so your family feels more comfortable about lending you money.
DON’T Take it Personally
When it comes to family, it’s hard not to take everything personally. Whether it’s an off-hand comment about your chosen career or the shirt you’re wearing, their words can sting.
So when they refuse to help, it’s easy to take their rejection to heart. But try for objectivity.
Although you’re asking for help from family, it’s a financial decision with real stakes. As hard as it can be to accept it, your family has to take care of their finances first.
They may also not be in the position to help you — whether they want to or not.
If they say no, don’t panic. There are other ways to get the funds you need when an unexpected emergency expense strikes.
An unsecured line of credit may be a way to get the cash you need, even if bad credit was the reason why you turned to family for help.
The trick is to head online for your unsecured line of credit. There’s a wide range of products online. If you look hard enough, you may find an unsecured line of credit that caters to your needs, so you may still borrow money if you have bad credit.
The biggest challenge of asking your family for money is finding the courage to speak up. But don’t let your embarrassment silence your voice. Everyone needs help eventually, and your family may be happy to help you in your time of need. You won’t know until you ask.