If a family member wants to borrow some money – should you do it?

Loaning money to a friend or family member might be a bad idea...

...but in some cases it could be worse, or too difficult to say no. If you do need to make the loan, here are a few things you can do that might help both of you:

• Ask what the money is for. Loaning someone money for a trip to the doctor might make more sense than a trip to the hairdresser or casino.

• Is this person reliable? If not, you may still decide to take a chance in good faith, knowing the risks. Jot down the terms of the loan – and make a copy. It’s a good way of letting the other person know you’re counting on them.

• Consider forgoing money for skills. If it’s too difficult for the person to pay the money back in a reasonable amount of time – there may be some work they can do for you instead.

• Never give cash. It may be easier for you both – but it’s worth the trouble of loaning in the form of check or money order. It provides proof of your loan. Write the word “loan” in the subject field. That prevents someone from claiming the money was a gift.