"May extra money ka ba diyan? Pautang naman."
Sick and tired of getting a request to loan money for the nth time? Wondering how to say no when someone asks to borrow money?
What makes this situation tricky is that it's hard to say no to someone dear to you, despite your best efforts not to care about what people think of you. But at the same time, you don't want to compromise your own finances.
Utang is part of the Filipino culture, so much that the percentage of adults with outstanding loans increased to 33% in 2019 from 22% in 2017, based on the 2019 Bangko Sentral ng Pilipinas Financial Inclusion Survey. Of those with loans, 44% borrowed from informal sources, particularly family and friends.
In other countries like Australia and New Zealand, family disputes stemming from unpaid loans even reach the courts. That's rare in the Philippines.
What Makes Lending Money so Awkward?
When money gets into a relationship, things are bound to get weird and awkward. Money is considered a sensitive and intimate subject for a lot of people. That's why people don't normally go into specifics about their financial situations, how much money they have saved, and how much money they owe.
So once you lend money to a friend or a family member, your relationship with that person also changes, whether you like it or not. They may feel indebted to you in more ways than one. Knowing that, it can also give you a sense of power over them. In short, you're now a kind of loan officer as well, aside from their best friend, cousin, niece, or nephew.
And because it's a friend or relative you're loaning the money to, there's really no guarantee that they'll pay you back for it. No matter how well you think you know someone, there may still be surprises or secrets when it comes to how they handle their money.
How to Say No When Someone Asks to Borrow Money
It can be tough to say no to lending money, especially if it's someone who's really in need of it. But there are guilt-free ways to do it. Here are some suggestions to consider.
1. Keep Your Financial Status Private
Most of the time, friends and family members come to you for money because they know you can afford to lend it to them. How? They see your online purchases, your food cravings from different restaurants, and your quick weekend getaways at beautiful boutique hotels on your social media accounts all the time. Since you look so financially comfortable, surely you can spare a few thousand pesos for someone in need, too?
If you don't want to be in these people's radar whenever they're facing cash emergencies, avoid sharing too much about your finances and your lifestyle. No one needs to know how much money you make, where you invest it, and what you spend it on. Keep your finances private so that friends and family won't be under the impression that getting a loan from you is already a given.
2. Consider Your Relationship with the Borrower
When you receive a call or a message from someone borrowing money, one of the first things you should consider is your relationship to that person. Your response will depend on how close you are to this person and how long you've known each other.
If it's someone you barely spoke to at your previous job, or just an online acquaintance, it's very easy to say no and be direct about it.
But if it's a sibling, a cousin, or an aunt that you're really close to, that's a different thing. You need to consider your words so as not to hurt their feelings and put a strain on your relationship as well.
3. Don't Be Pressured Into Saying Yes
Before you can actually say no to any loan money request, it's important to first sort out your feelings about it.
While it's considered selfish and a little too harsh to decline to help loved ones financially, you're in no way obligated to give in to any request that's against your will. It's your hard-earned money we're talking about—whether you can afford to lend money or not, it's your call how you use it.
The pressure often comes from the need to repay one's utang na loob, fear of confrontation and being badmouthed, or the Filipino's innate generosity. Sometimes, the people who try to borrow money are the ones pushing you to make a quick—and favorable—decision by creating a sense of urgency.
Expect that in most cases, money borrowed by family and friends are likely to be never paid back—no matter how much they assure you that they'll return the cash. If you're on a tight budget, lending money is simply not an option.
4. Just Tell Them You Don't Loan Money
Personal finance expert Fitz Villafuerte gives a sensible piece of advice: Tell them point-blank that as a personal rule, you don't lend money to friends (or relatives, whichever is applicable). Such statement is direct yet doesn't pass judgment to the person.
Delaying your response or being wishy-washy about it won't help. Neither does getting them seenzoned on Facebook and hoping they'd get the hint.
5. Practice Saying No
From a psychological perspective, you can train your mind to make saying no a habit when someone asks you a favor, especially if you're naturally a people pleaser who always say yes.
Research shows that planning and rehearsing your response before you receive a request allows you to respond in a manner that's consistent with what you originally intended, like saying no to a friend who keeps asking for money.
Come up with a default non-committal response (e.g., "Sorry, I can't loan money to you this time." or "Pasensya na, medyo tight talaga ang budget.") and practice saying it before you're confronted with a request to borrow cash.
6. Listen and Empathize
It's a different thing when someone close to you comes up and asks for your help. Give your family member or friend the benefit of the doubt—they may be really in a serious financial trouble.
Listen intently, be genuinely concerned, and show that you're trying your best to understand the situation—without promising or committing to anything.
This way, you make the person feel you aren't disregarding his or her feelings. Also, having a clear picture of the circumstances that have led to the need to borrow will enable you to help without having to loan money to your family or friend.
7. Give Yourself Time to Think of an Appropriate Response
Depending on the relationship you have with the person, an outright "no" may cause tension between you and your family or friend.
After listening to the person, tell them that you'll need some time to check your budget and assess your finances. Give it around one to three days—this is enough time for you to think of a good response and for the person to figure out other ways to obtain money.
8. Be Clear About Your Priorities
It's much easier to say no if you know your financial priorities—like saving up for your child's education or a home or car purchase—than if you aren't sure about the things that matter to you.
Keep your own finances your priority—and be firm about it. After all, you can't help others financially if you can't even sort out your own finances.
9. Explain Your Financial Situation Honestly and Calmly
When you explain your decision, be honest and assertive about your reasons for turning down the loan money request. But be calm as well—avoid speaking in an angry tone, no matter how exasperated you are with the person or situation.
Let your friend understand your financial situation and goals, and how lending money may not fit into the picture. You can say, "I'd really love to help you, but I'm on a tight budget right now, just like you. Sorry, I can't afford to lend you money right now."
Such a response doesn't give much detail but clearly states your point without hurting someone's feelings. If that person is really close to you, they will understand and will not hold grudge against you.
No need to overexplain. Sharing more details than necessary might make the person feel that you think he or she can't handle a refusal.
10. Offer to Help in a Different Way
Can't afford to support your loved one financially but you really want to help? You can do so without shelling out cash. Sincerely offer non-monetary assistance. This is a great way to soften the impact of rejection and help the person become less reliant on financial help from family and friends.
Here are some ways to support family or friends who try to borrow money:
- Help them find a raket or side business. Or share any opportunity or idea you know that lets them earn extra income
- Tell them to get a low-interest personal loan that allows them to borrow money at a low cost. If you have extra time, you can assist them in preparing the document requirements or research anything they need to know to qualify and get approved for a loan.
- Accompany them in finding and applying for scholarships, grants, and other forms of financial assistance from different entities for their specific financial need.
- If they're always short of cash and can't seem to get their finances in order, offer to help review and track their budget.
11. Stand Your Ground
What if your family and friends keep pestering you? No matter what, be firm with your decision. Reiterate what you've said to let them know that you've made up your mind and there's no changing it. They'll understand and respect your decision.
If they react negatively, don't hesitate to let them know how they're making you feel. Tell them that you value your friendship or relationship. However, their actions are making you feel uncomfortable, stressed, or unhappy even if you've made it clear that you won't be able to loan money. People who truly love you care about your feelings and wouldn't want to hurt you.
If they still won't back down, just let things be, focus on the good, and move on. The situation may have cost your relationship. But at least you aren't stressing over collecting a debt or running short of budget.
When declining to loan money to friends or family members, never feel guilty about it. You have your own needs and priorities to take care of. Can you bear touching your child's tuition fund or your family's food budget, for instance, just because you can't say no to a friend?
Refusing to loan money isn't being selfish. You aren't helping people by lending them money. It only teaches them to be more financially dependent on others instead of helping themselves.