RICHMOND, VA (WWBT) - A recent study by LendingTree shows that people who lend money to their relatives only get about 57 percent of it back.
That means if you gave your child $500 dollars, you would only get $285 dollars back, and that’s if you’re lucky.
Most of these family loans are coming from parents. More than 75 percent of men reported borrowing money from mom and dad, compared to just 63 percent of women.
The study found most of that money is going towards a down payment on a home, with debt payments coming in a distant second.
Cherry Dale with the Virginia Credit Union said before you open your wallet to that family member in need, stop and think, and don’t make impulse decisions.
“We might immediately run to the rescue of someone we love and there’s nothing wrong with that, but if it’s really going to impact your finance in a negative way, you really want to reconsider perhaps look at other alternatives that that person may have,” Dale said.
If you find yourself in this situation, first, make a policy of saying no. If you don’t want to shut them down right away, try to find other ways to help instead of an immediate bailout.
For instance, instead of giving them money, offer to help them make a budget to better manage their finances. If you feel like you must lend them money - be smart about it. That could be as simple as putting the transaction in writing so it’s not forgotten.