How To Ask Your Family for Money: 5 Steps To Make It Work

Life often throws unexpected challenges our way and sometimes you may find yourself in need of financial assistance. Having a support system can help us through these stressful times — but asking family for money can bring up a lot of different emotions.

With the right approach, asking for the support you need can be done respectfully. These steps can help you and your loved ones feel more comfortable during this process, and help you maintain trust and a healthy relationship.

How do I ask my family to borrow money?

1. Determine your needs.

Before approaching your family, you should take a moment to reflect on your financial situation and determine exactly what your needs are. Consider things such as:

• How much money do you need?
• What do you need it for?
• How soon will you be able to pay it back?

Being specific and honest about the exact amount of money you need, and why you need it, can show that you’ve thought this through. Plus, it can make them feel more confident in your request. For example, saying “I need $1,000 to pay my rent this month because I had unexpected car repairs” is much clearer than a vague request like “I could use some help with stuff.”

2. Consider your family member’s financial situation.

Sometimes family members aren’t in a place to offer financial help — even if they’d like to. Before you ask for money, consider their personal finances or mental state as they may not be in a position to be able to lend you financial assistance. If they’re not in the best mental or financial spot themselves, it may be better to look for alternatives.

3. Show the work you’ve done so far.

When it comes to lending money, family members may be more comfortable if you can show them steps you’ve taken to manage the situation before turning to them.

• Have you created a budget?
• Have you cut back on spending and canceled unnecessary subscriptions?
• Have you considered part-time work or selling items you no longer need?
• Have you looked into government aid or community support?

While this step isn’t always applicable, it can help show family members that you’re taking responsibility and it may help smooth the conversation.

4. Write up a loan agreement.

To prevent misunderstandings and protect your relationship, create a simple written loan agreement for both parties to sign. This isn’t just for peace of mind — it shows that you take the request seriously and can help prevent arguments or issues down the road. Consider seeking advice from a legal professional to determine the best way to formalize the agreement. You may want to consider including things such as:

• The exact amount of the loan.
• A repayment schedule with specific dates.
• Interest charges, if any (though some family members may not expect this).
• Plans for what to do in case of late or missed payments.

5. Repay the loan as promised.

The best way to show your appreciation for a family loan is to honor your repayment plan. Repaying your loan on time — or even earlier if possible — can help you avoid arguments and protect your relationship. If something delays your repayment, talk with them immediately and explain your plan to get back on track. Communication is key and keeping your family informed will help you maintain their trust.

What are the advantages and disadvantages of borrowing money from your family?

Now that you know how to ask for money from your family, you should consider the pros and cons of a family loan to make sure it’s the right decision for you.

Pros

Low interest rates. While banks and other lenders will often charge high interest rates, your family may not expect you to pay any interest or will offer a lower interest rate which can help you save money on repayment.

Flexible repayment terms. Family will also often allow you to pay on a schedule that works for you and may be more forgiving of late payments.

Protect your credit score. Borrowing privately won’t impact your credit score. Financial institutions often report to the credit bureaus, meaning that missed or late payments could damage your score.

Cons

Strained relationships. Money and family aren’t always the best mix. Misunderstanding can put stress on your relationships and may create tension or resentment.

No legal protection. Unlike formal loans from a bank or financial institution, family loans don’t have the same legal protections, which can lead to disputes if something goes wrong.

Awkward dynamics. When you borrow from family you may feel obligated to them in other ways or have to deal with an awkward power imbalance.

What are some alternatives if your family can’t help?

If borrowing money from your family isn’t an option, there are a few alternatives that can help you cover emergency costs. It’s almost always best to exhaust options — such as earning extra money — that don’t increase your level of debt. Personal loans can provide much-needed cash in emergencies, but it’s important to research your options to find one that best meets your needs.

Earn extra money. In today’s economy, side hustles are common and can provide an opportunity to make more money — sometimes quickly. Consider selling items you no longer need, offering a service such as dog-walking or tutoring or taking on freelance work in your spare time.

Installment loan. An installment loan is a personal loan option that offers a borrower an upfront lump sum of cash to take care of financial needs. Installment loans are repaid gradually over time, spreading out the cost over months or even years,

Line of credit. A line of credit is a form of revolving credit that allows a borrower to draw cash from a set credit limit. As the funds are repaid, they become available to borrow again. Lines of credit can be useful when covering ongoing expenses and can act as a safety net — giving you access to funds as needed.

Credit card cash advance. A credit card cash advance allows you to borrow cash against your existing credit card’s credit limit. It can offer quick access to cash, but the amount offered is often lower and may not cover the full amount. Cash advances on credit cards typically come with higher interest rates, and additional fees or charges may also apply.

How to avoid asking for help in the future.

We all need help every now and then, but it’s also important to plan for the future and build financial independence. Here’s how you can build yourself a safety net so you can pay it forward in the future.

Budget. Budgeting is one of the most powerful financial tools at your disposal — and it’s a lot easier than most people think. You can build a budget that fits your lifestyle and savings goals in just a few simple steps.

Build an emergency fund. An emergency fund is a savings account that you can draw from in the event of unexpected expenses. Many experts recommend having about three to six months worth of expenses saved up — but even saving a few hundred dollars can help you out in a pinch.

Take a personal finance course. There are a ton of free resources online and within local communities that can help you learn about personal finances — from budgeting, to investing and more. You should be sure to research your sources since there are a lot of scammers on social media and other sites. Just remember — if it sounds too good to be true, it probably is.

The Bottom Line

Asking your family or friends for money can be a daunting task. With a respectful approach and some consideration, you can make the process comfortable and as easy as possible for everyone. Being upfront and honest can help you protect your relationships while getting the financial assistance you need.

DISCLAIMER: This content is for informational purposes only and should not be considered financial, investment or legal advice.