A third of us end up borrowing from family and friends – but talking about it can still be tricky.
9 September 2019| Last updated on 9 September 2019
All Credits: PA
Many of us find talking about money to family and friends difficult.
But given that many of us end up lending to – or borrowing from – loved ones at some point or other means it makes sense that we’re able to have conversations about cash so that everyone knows where they stand.
Informal borrowing like this is pretty common. A third (31%) of us have had to borrow money from family and friends at some part in our lives, a survey from Lloyds Bank suggests. Many of those giving informal cash loans may never see their money again – as more than half (53%) of the borrowers surveyed said they don’t expect to pay it back.
The ‘Bank of Mum and Dad’ is the most likely source of informal financial support, lending an average of £4,008, Lloyds found. Meanwhile, one in 20 (5%) have borrowed from siblings and 4% from friends, with 3% seeking financial support from grandparents.
While some borrowers may be saving up for a specific goal, such as a deposit on a house, university costs or a car, others have been using the extra help just to get by. More than a fifth (22%) were borrowing money from friends and family to cover day-to-day living costs.
It might be a subject we generally tend to keep quiet about, and money worries can cause us lots of stress, talking about it can potentially relieve a lot of problems. Martin King, head of customer support at Lloyds Bank, says: “Getting support from those closest to us can be a good solution, but the fear of opening up and talking to our family can either prevent us from ever asking or mean that we leave it until it becomes a situation that needs an urgent fix, which adds even more pressure.
“Whether you’re asking for help from the Bank of Mum and Dad or talking to your parents about their plans for retirement, you should never feel afraid to speak up about money,” King adds.
Here are Lloyds Bank’s tips to help make money conversations easier…
1. Be prepared
Sometimes it’s hard to know where to start. Ahead of any conversation about money, it can help to gather all the information you need to allow you understand exactly what you need support with. It’s useful to have items such as bills and bank statements to hand, so you can be clear and not feel like you have to remember every little detail.
For example, if you are struggling to get a deposit together for a home, it will be easier to start the conversation if you know how much you’ll need to borrow and over what period. Once you’ve established all the facts, working out a plan for how you will pay the money back becomes much easier.
3. Listen as well as talk
A calm exchange of views is a lot better than one person giving their point of view and not giving the other a chance to be heard. If you’re asking for financial support, it’s understandable that the other person might have some questions and concerns. Understand and acknowledge the other person’s point of view and be ready to answer their questions about why you need help, and any other options you’ve explored.
5. Keep the conversation going
Sometimes the relief of having talked about money is so overwhelming that people don’t mention it again, and forget to put words into action. Having regular conversations about money is really helpful, both for your finances and your relationships. Make this a habit – not just a conversation you have when times are difficult.