The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly.

Most of us would like to say that money doesn’t matter, that it would never cause a rift in a friendship or any kind of relationship. Would you lend money to a friend if they were having financial issues? Most of us would automatically say yes.

However, the reality is that too often, issues to do with money can act as a catalyst in friends drifting apart. To say that people should choose their friends over money is an obvious statement and at face value, clearly correct, yet the statement ignores the complexity of the relationships people have with each other and with money.

Our recent ‘Financial Friendships’ research has found that in fact a massive seven million people have lost contact with a friend over some kind of clash due to finances.

We found that younger people (24 – 35 year olds) are more prone to falling out with their mates over money, and that in the battle of the sexes, men were much more likely than woman to admit to having fallen out with a friend due to a financial dispute.

The thing about money is that it is a very personal subject that reaches pretty much every aspect of our lives. While it is normal for friends to want to help each other out when in financial difficulty, if that show of support is abused, it can often be seen as a breach of trust and cause deep rooted resentment between people.

However, the truth is that often arguments over money can be avoided. So the question is how can people retain their friendships when money gets in the way?

The problem is lending a friend money is just as risky as refusing to lend a friend money; therefore people need to be completely open it. Below we outline some of our top tips on how to lend money to friends and maintain a friendship:

  • Only lend what you can afford
    Never lend more than you can afford to lose. If the money does not get paid back, you need to decide if you would be willing to forgive the debt so that you might preserve the friendship.
  • Everyone should want to be in the agreement
    Make sure that you don’t get emotionally blackmailed into lending money. In the same regard, make sure that your support will be well received and that the recipient does not feel embarrassed by the gesture. In both of these cases, resentment could develop and fracture your relationship.
  • Discuss Terms
    Make sure you go into any agreement with your eyes open and talk about a repayment plan; lending money cannot be a one-sided process. By laying out the terms of how the financial relationship could work, you can move on with your friendship on the understanding that, as long as the terms are met, there will be no problems between the two of you.
  • Don’t involve yourself after the act
    Don’t try and manage a person’s spending after you’ve given your friend the money. Once you’ve loaned the money, then it is no longer in your control. Obsessing over how it’s spent will only serve to cause resentment to both parties.

No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting Advisers may charge for providing such advice and should confirm any cost beforehand.