« Do more expensive wines actually taste better? | Main | Time to think outside the hammock, author says. »

August 10, 2021

Should you ever loan friends money?

There are three scenarios in life guaranteed to end, like this sentence’s phrasing, awkward.

349117-349117-handshake-over-signed-contract 1) Admitting that you own U.S. Treasury bonds.
2) Laughing on a first date and having a fart slip out.
3) Being asked to loan a friend money.

The first two can be avoided to some extent, but we always seem to have that leech of a friend, er, friend in need to consider helping out with cash.

Should you ever do it? Of course – realistically, how are you going to get away with saying no? A better question, perhaps: how  should you do it?

Certainly, there are several philosophies on the relationship between friends and money. In fact, there’s an even an entire WikiHow page on the best ways to size up the situation, complete with worst-case phrases like, “If Jason” – their choice of name – “is just a kind of merry jerk, you may be best off to consider that money gone and just resume your friendship, resolving never to ‘loan’ Jason any money in the future.”

One of the more interesting strategies out there, though, is surely a polarizing prospect.

By the suggestion of Deborah Hutchison, co-author of Put It in Writing! Creating Agreements Between Family and Friends, two pals should actually consider drafting a written contract when cash changes hands.

This idea could either intrigue or mortify you, depending on your ease with lending out dough, yet the results are supposedly very real.

Hutchison tells MSN Money in the U.S. that any kind of written agreement, even if it’s just on a cocktail napkin, may be more likely to end in a repaid loan.

Still, boy … perhaps it’s my own fear of awkward tension, but I can’t ever imagine feeling comfortable asking a friend to sign a contract agreeing to repay any money I’ve loaned (or vice versa). In the best case, you’d hand out the cash and trust any real friend would make it a priority to respect your generosity.

Do you ever loan money to friends? If so, how do you go about getting repaid? If not, is it because you’ve never been asked or because you make it a firm rule not to?

By Jason Buckland, MSN Money



Post a comment


Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...