FinWise, Capital Community and First Electronic Banks are all facing scrutiny. Photo: KSL TV
SALT LAKE CITY — Lending money to friends or loved ones is like gambling, says a nationwide financial expert. If you get your money back, great, if not, that’s why it’s called gambling. Also, he said, don’t lend or bet money you cannot afford to lose.
In a new study by Bankrate, it shows that nearly three in five people who have lent money suffered negative consequences. KSL NewsRadio’s Dave and Dujanovic are joined by Ted Rossman, an analyst at Bankrate, who shares tips on how to say, “Sorry, but no,” when someone asks you for money.
Neither a borrower nor a lender be, for loan oft loses both itself and friend, and borrowing dulls the edge of husbandry*.
William Shakespeare
Almost seven in 10 U.S. adults (69 percent) say they have lent money to friends or family, a new Bankrate survey found. Acting as a bank for your loved ones has a coin toss’ odds of ending badly, according to the survey of 2,225 U.S. adults in November 2021.
Here are the top four ways people said they helped out a friend or family member financially, the survey discovered:
From the survey results, the show guest, Ted Rossman, shares this: It’s best to avoid mixing friends, family and money.
The poll found that those who helped friends and family out financially experienced these negative consequences:
Both Dave & Dujanovic acknowledged that they could be better lenders when it came to their children.
“You told me an hour ago when we first tackled this,” Dujanovic said, “that you hadn’t bothered to have the conversation with your kids on how to deal with it, and I admitted I’ve fallen down to as a mom.”
“That’s because we’re bad at parenting. It’s very obvious to me,” Dave replied.
“I think it’s more common than ever for young adults to pick up the tab at the restaurant or maybe it’s a destination, bachelor or bachelorette party or some other group trip. Sometimes it’s unclear who’s paying for what.
“There’s diminishing returns with this stuff. I think if you don’t get paid back quickly, you might not get paid back at all. So I definitely think it makes sense to use these programs like Venmo to prompt people and hopefully get quick repayment,” Rossman said.
Dave asked what a safe dollar amount to lend to family or loved ones might be.
“Don’t lend more than you can afford to lose,” Rossman said. “I think in many respects it’s kind of like gambling in a way, but you know, once the money is gone, you may not see it again. So, I think you do need to be really thoughtful, and I don’t want to sound insensitive.
“I mean it’s nice to help family and friends if you can, but put your oxygen mask on before helping others — like they say on the airline. And just make sure that you’re going into this with eyes wide open that you might not see the money again.
“You have to be okay with that. Maybe even consider phrasing it as a gift rather than a loan because loans can really hang over people and make it awkward,” Rossman advised.
In the survey referenced above, he added, respondents were asked if they would or would not purse repayment if they lent a friend of family member $100. Half said they would; half said they would not, Rossman said.
“I think even if you don’t pursue repayment, there can still be some lingering hurt feelings, but where I think it really gets problematic is when it’s a lot more than $100,” Rossman said.
———————————————————————————————————————————————————-
*Meaning: management and conservation of resources
Example: “Low borrowing demonstrates astute husbandry of resources.”
Dave & Dujanovic can be heard weekdays from 9 a.m. to noon. on KSL NewsRadio. Users can find the show on the KSL NewsRadio website and app, as well as Apple Podcasts and Google Play.
Read more: