Read This Before Borrowing Money From Family and Friends

Everyone needs help at one point or the other — it is completely normal. And it is just soothing to know you have people around that you can turn to when you need a little (or maybe a lot of) extra cash.

With tightening economic conditions, the chances of the average Nigerian needing a loan to balance his budget are on the increase. This is evident in the increase in demand for loan-giving apps today. You might even need a loan for other reasons such as raising capital for your business or to pay your tuition and so on.

But before you make that phone call or even go knocking on the door of friends and family to borrow money, there are a few things you need to know and consider.

It is true that borrowing from people close to us offers a few upsides such as convenience, as we don't have to worry about filling forms or going through rigorous interviews to get help. There's also flexibility, as it is much easier to work through the terms of the loan with a loved one than with a financial institution — not only do you get to negotiate your repayment schedule, you're also very unlikely to pay with interest.

However, as important as money is to our daily living, it can have toxic effects on our long-term relationships with family and friends. Several relationships have been permanently scarred today because someone borrowed money from the other party. In some extreme cases, in fact, marriages have turned sour.

A survey by finder.com revealed that nearly three-quarters of people who borrow money from friends or family never pay back everything they borrow. You might think yours will be an exception, but so did most of the others who defaulted.

Little wonder several people have developed rigid walls against lending money to friends and family. Rather than lend out money, they give out what they can afford in order to protect themselves and the relationship.

One major problem, however, is that several people resort to borrowing money they did not actually need to, indirectly making repayment less comfortable for themselves. Some even borrow money from friends and family in order to repay existing loans, and that's already a major red flag.

Before taking a loan from friends and family to support your lifestyle, you should make sure you've at least attempted to tick the following boxes:

• Cut off unnecessary expenses, nobody dies from living within their means.
• Get a side gig or a second job to boost your income.
• Ask for a raise from your employer. What's the worst that could happen?
• If you're looking to service current debts, try negotiating your obligations with your creditor(s).

In conclusion, you'll increase your chances of gaining stability once you are able to avoid debts of any kind (yes, including the so-called "good debts"). Repayment of loans is hardly ever convenient, so you shouldn't make it your first line of action in times of shortage.

Do you have other opinions about taking loans from family and friends? Drop it in the comments section. We love to hear from you.