Has a friend or family member “forgotten” he/she owes you money? Do you simmer every time you see them? Smile between clenched teeth when they buy a new car or tell you about their theater tickets or vacation? Avoid them, or make sarcastic indirect comments? (Confession: I’ve been guilty of all.)
Most of us are uncomfortable talking about money – whethr we have a lot or a little. Someone in my church – which focuses on social justice — once suggested we share income tax returns. Provoked an uproar. Whether we have less than others or more, we’re embarrassed to divulge the details. Who wants to be judged? The target of pity? Or envy?
When I was 16 my Dad loaned me money to buy my first car, and later some real estate. But along with the money, he handed me an IOU to sign. Together we worked out a repayment schedule. It telegraphed his willingness to help– and expectation of repayment. It actually made me feel grown up.
“Ask Amy” (advice column in the Washington Post), recently ran a complaint from an unpaid parent who felt frustrated and angry, but didn’t want to alienate his adult child. In response a reader told that every January 1st his father would show the family a spreadsheet of his assets, liabilities, and amounts they owed him. He encouraged them to do the same with their own families. The Dad said anything that wasn’t repaid would be deducted from their share of his estate when he died.
This proactive approach has several virtues. It communicates trust through willingness to share information that adult kids need to know but may hesitate to ask; treats the loan as a serious matter; holds the child accountable; gives the child flexibility in terms of repayment; is fair to other heirs. It also sets a strong example of family transparency which can be helpful to siblings when the parent has passed. And it’s appropriate in families where the parents have little and in wealthy ones as well. Paying debts is not about the lender’s need; it’s about keeping one’s promises.
Of course, if a person has harsh circumstances (sudden illness, job loss) and may never be able to repay, you may prefer to give the money rather than to lend it. That way your own expectations – and the pressure on the borrower – are relieved. Or you could think together of a way they can repay you in services – or can pay it forward to someone else who needs it later on.
We’d love to hear how readers have handled this. Should adult kids be expected to repay their parents? How can parents initiate this tough conversation?
If you’re going to loan money to relatives, start with small amounts. If you are paid back promptly, you’ll be more comfortable loaning larger amounts later on. If you’re NOT paid back, you won’t be out too much and you’ll know not to lend to that relative again. There are people in the world who simply don’t believe they’re obliged to make good on their debts. Sadly, these people are sometimes our loved ones.