There is no greater minefield, no bigger potential for disastrous rifts, than when family lends money to family. So I am often baffled when I get flak on Shark Tank for saying money and tears don’t mix. In all my years on TV, no one’s ever asked me why. I’ll tell you now. From my book Cold Hard Truth on Men, Women & Money.
It’s because emotions aren’t factual. You can’t accurately measure them, and they change constantly. Money, on the other hand, is factual—you can measure it. Money doesn’t change. Therefore, I see money and emotions as incompatible forces. Like oil and water, they don’t mix. Think of the toxic results of emotional spending. Think of how wrenching it is when a member of your family begs you for money you know you’ll never see again. Lending friends and family money is one of the worst forms of Ghost Money there is because it breeds real resentment—which, by definition, is a feeling that is felt over and over again. Every time you see that person to whom you’ve lent money, feelings of anger and regret will creep in. What a way to ruin a relationship.
That’s why you must have the discipline to say no to lending money you’re not prepared to give. Start by separating yourself emotionally from your own money, or you’ll be plagued by people trying to part you and your cash. You must begin to think of your money as the very blood that runs through your body. It’s that vital. Money is a life force, like blood. You need a certain amount or you’ll die. You can live after a severe loss of blood, but you won’t feel well until you’re replenished. Thinking this way has made me very selective when it comes to parting with my money. That’s why I have no problem saying no to people who try to appeal to my emotions.
Next time your brother comes to you with a personal plea to invest your $30,000 in his restaurant, say no on behalf of your money. When your child is throwing a temper tantrum in the aisle of the grocery story until you buy his or her favorite snack, you must say no on behalf of your money. If your husband makes a counteroffer after you kyboshed his golf trip in order to pay off some debt, you must say no on behalf of your money.
Lending people money so they don’t get mad at you is as bad as compulsive spending. And once begun, lending money, like compulsive spending, is a very dangerous habit to break. I’m no psychotherapist, but I do know this: Compulsive spending and lending don’t end anywhere good. They have to stop.
I offer this caveat, however: There’s another way to handle these requests. Give your brother the money. But give only an amount you’re comfortable never seeing again. That’s right:
Even if your brother insists it’s a loan, treat it like a gift. Never expect to see money you loan friends or family again, and it will divorce emotion from that transaction and preempt any toxic resentment that may result if your brother doesn’t pay you back. Best news is, you never have to do this again. Next time your brother asks, tell him you already gave him money. That was very generous and will suffice.