Should you loan money to family?


Jordan Harbinger generally advises against loaning money to family unless certain conditions and precautions are met. This is mainly because lending money can lead to complex familial and financial problems if not handled correctly. Here are some key pieces of advice from Jordan on the topic:

  1. Documentation is Crucial: Whenever loaning money to family, it's essential to document the agreement. This includes specifying the amount, date, purpose, and terms of repayment. Doing so reduces misunderstandings and confirms the reality of the arrangement, preventing scenarios where the loan is mistaken for a gift or forgotten entirely 1.

  2. Avoid Lending If Underlying Issues Exist: It's advisable not to lend money until the recipient has their financial situation under control. Lending to someone who is financially irresponsible can exacerbate their problems and lead to resentment if the money is not managed or repaid as expected 2.

  3. Legal and Financial Risks: Be aware of the potential legal and financial risks involved. When money is lent to help with a family business or significant debts, the lender might unknowingly become liable for the recipient's financial mistakes, especially if the business or financial management is poor 3.

    Loaning Money Advice

    Dr. Hassan recommends putting all loans to loved ones in writing and having the other person sign that record to avoid drama and confirm reality. Jordan advises listeners to take note of this advice for future loaning situations.

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Overall, it is prudent to approach the idea of loaning money to family with caution, ensuring that both parties are clear about the terms and conditions, and considering whether it might be better to provide non-financial help instead.