Money and Friendship: How to Help Without Hurting a Relationship

Many Americans talk about money with friends, and more people have been open to lending in recent surveys. However, research shows that lending can harm relationships: nearly half of people say they would not lend their best friend $500, and between 21% and 36% of people report losing a friendship over money. People have become more willing to help for short needs, but they also worry about awkwardness and repayment.

People who lend sometimes try to recover funds later. About one quarter of lenders set up a formal payment plan to get repaid. Because private lending is often informal, misunderstandings are common and feelings can be hurt.

Experts recommend clear boundaries. Before you lend, decide if the transfer is a loan or a gift, agree on an amount and a repayment date, and put the plan in writing. Ask for partial payments if needed and be sure you can afford to lose the money. If you think you would be upset if the money is not repaid, you should not lend.