Lending money to family changes relationships, creating borrower-lender dynamics that can lead to tension and misunderstandings without clear written terms.
Q: Do you think it is wise for family members to lend money to one another – for example, between siblings, parents and children or adult children and their parents? Why or why not?
Focus on the Family Malaysia: Financial counsellor Ron Blue highlights a key consideration in situations involving family loans: whenever money is lent, the relationship between the parties inevitably changes.
The relationship is no longer simply one of brother and sister, parent and child or friends. Once money is lent, the dynamic changes, creating a borrower-lender relationship and adding a new layer of complexity.
The same principle applies when cosigning a loan for a family member. By acting as a guarantor for someone else’s debt, you are effectively assuming responsibility for the loan. In practical terms, this is much the same as lending the money yourself.
If a family member is genuinely in need, it may be worth considering giving the money outright rather than treating it as a loan. Offering financial assistance with no strings attached is a commendable and positive virtue.
However, if you have reasons to believe that this would be impractical or unwise, Ron Blue recommends that you establish a formal borrower-lender arrangement, with clearly defined repayment terms and interest rates.
Both parties should clearly understand and agree to the terms from the outset. Vague arrangements such as “pay me back when you can” can lead to misunderstandings and strained relationships.
To avoid uncertainty, the terms of the loan should be in writing. Ultimately, lending to or borrowing from family members can be risky because it changes the nature of the relationship and may create tension over time. While such arrangements are not necessarily wrong, they should be entered into with care, clear expectations and careful consideration.
Q: I am a stay-at-home mum and my husband works hard to provide for our family but we live on a tight budget. How can I give my children the chance to explore different activities and programmes when we have limited money? I do not want them to miss out on life-enriching opportunities.
Focus on the Family Malaysia: Children thrive not because they participate in countless activities or own the latest gadgets but because they have committed, caring parents who spend meaningful time with them and prioritise character over comfort and consumerism.
So, if you feel guilty because you cannot provide everything that popular culture suggests children need, set those concerns aside. What matters most is not the amount of money spent on them but the love, guidance and attention they receive at home.
There are many ways to provide enriching experiences for children without spending a great deal of money.
One of the best places to start is the local library. Books can open doors to new ideas, cultures and places, broadening a child’s horizons and sparking curiosity. If they are old enough, encourage them to get their own library cards and choose books and other materials that interest them.
You can also make use of public museums, science centres and zoos in your area, many of which offer free or low-cost programmes for children. If you live in a rural area, this may require an occasional special trip but the experience can be worth the time and effort.
Do not overlook the value of music and drama either. Many communities and universities offer concerts, performances and theatre productions that are suitable for children.
These are just a few ideas. With a little creativity, and by sharing suggestions with other parents, you can discover many more affordable ways to enrich your children’s lives.
This article is contributed by Focus on the Family Malaysia, a non-profit organisation dedicated to supporting and strengthening the family unit. It provides a myriad of programmes and resources, including professional counselling services, to the community. For more information, visit family.org.my. Comments: [email protected]
