Should we lend money or not?

Should we lend money or not?. If yes, whom to lend whom not to.I'm sure you might have come across this question in your mind when someone has cheated you borrowing money from you and never returned. So, I will talk about it in detail using short stories which will give you a broad understanding of whom to give and whom not to.

First, let me tell you why I consider it as a part of money management, so whenever we get in the form of salary or profit from our business, we basically have two ways to spend it "NEEDS" & "WANTS".

Here when I say needs, I mean to say all the essential requirement for the existence of life whereas wants refers to a comfortable or rather a luxurious lifestyle. So, let me give you an example like we all need water to survive but there are people who want, clean, safe to drink, and vapor distilled with added electrolyte in water for taste. I am pretty sure by now you have understood what I mean by needs and wants.

So, let say you want to fulfill both your needs and wants, fair enough, now my question is what do you do with the money that you saved after fulfilling your needs and wants, some of will keep in our bank account some of you will be having it as cash at home.

Here comes the important part, this is the money that is at risk, what if I say that someone tells you a story and takes away all this money and you really don't have any idea about that story. The story which I am talking about might be true sometimes but chances are higher that, in most of the cases it will just be a fictitious story.

So, let's get to the point, should we lend money or not. Well, I would like to give a disclaimer that the decision will be yours obviously, on a broader perspective I will try to explain should you lend money or not or rather you can say I will share my own experience with lending money.

Recently, I got a new job after a week maybe, a guy at my workplace who works there for the last 3 years, initiated talk and asked my name and where I am from then I answered his questions. Then he said, "Oh! you are also from that place I am also from that same place" and there continued a kind of long talk as he was from my birthplace.

Things went well for a few weeks, then started this mess, one day suddenly he asked me just 50 bucks for lunch and he made the situation very urgent and then I didn't think much and gave him the amount, thinking he might not have now will return me soon, then after a few days I asked him to transfer the money using online as I need money now but he behaved weirdly, I thought probably he doesn't have money now will return me soon when he gets.

Again as I recently joined a new job and thus wanted a new lunchbox but the price was not fitting my budget which I saw in one of shopping complex, at that moment he was standing beside me and said why do you want to waste money, I can get you lunchbox at much cheaper and affordable price. He told me to give him 300 bucks and said that he will bring tomorrow there's a shop near his residence, I thought it to be a great deal and gave him the amount as he asked. The very next day I told him hey where's my box he told me, "Oh! no, I forgot to bring it, it's in my room".Again the next day I asked did you bring the box today, he replied, "The shop got closed due to COVID-19", then I asked furiously why did u lie yesterday that box is in your room then he said "ok give me one more day and promise I will bring tomorrow", and guess what next day again he didn't bring the box. So I was frustrated and told him that do me a favor don't bring a box for that money you better return my money as soon as possible, that day I purchased a box that was out of my budget but that's ok I think.

One week later, when I asked him the money back he was always giving me excuses instead of 350 bucks he always used to give me excuses. I continued asking him repeatedly for the money later he returned me the money but guess what he only returned me 300 bucks, not the complete amount and I was like at least I got my 300 bucks back. So I made a loss of 50 bucks exactly if you do a simple maths the percentage of loss I made giving him the money, 50 divided by 350 times 100 that's equal to 14.3%.

I am pretty sure many of you are thinking about why am I talking like that, and why the hell am I taking out the loss in percentage, so let me remind you that 14.3% is something that you won't be able to earn in any of the investment schemes though there are certain exceptions.

So here starts the next phase now a few days later he asked me 1000 bucks now, I am like why the hell is he asking money again. I replied I don't have money then he said ok whenever you get salary please give me 1000 bucks, I am sure most of you are thinking that might be he is in problem thus he is asking for money but the harsh truth is I haven't taken the oath to solve everyone's problem. See you will have to think this way are you really helping some or becoming a fool.

There is one more angle to this, see I met him a few weeks ago and he started asking me for help. He stays in a one BHK room for last 3 years with 3 of his friends you can say, why can't he ask money from his roommates who are staying with him for such long, why me; and even due to COVID-19 government has given relaxation on withdrawing money from the provident fund before retirement and since he started his job 3 years ago he must have a handsome amount of money there why isn't he choosing those option for tsking help and why me.

Let me tell you that this isn't the past that I'm writing it's an ongoing story and I haven't given him 1000 bucks yet and I even told him clearly that I will not give him money and asked him to ask someone else.

Let's suppose maybe I change my mind and give 1000 bucks and again if he gives me backs the money with loss of 14.3%, simple math says I will get 857 bucks back a loss of 143 bucks or maybe he won't even return me a single penny.

See I am not saying don't lend money, but before lending money to anyone analyze properly the person.

Before lending money you need to ask yourself "WHY, WHEN, WHOM, HOW"

• You need to ask the borrower, why he needs money.
• You need to ask yourself, what is the situation when the borrower needs money?
• Again you need to ask yourself, whom are you going to lend money?
• Now you need to ask the borrower, How is he going to return your money back?
• If he says you a plan how he is going to return the money then ask him what if this plan fails.

Since you have come reading this blog till the end I will give you a bonus tip to save you money from risk or maybe reduce your risk. So even if someone asks you money and you are not sure whether to give him or not better try it out by giving him an amount that you can afford to lose and it won't bother you much. Like in my case I can afford till 200 and it won't really bother me much.

I will add up if there is a change in this story or my experience since it's an ongoing story. Until then keep you money safe and invested.