Good friends support each other in tough times, and having a friend in debt can be a stressful experience.
Money can be a very emotional subject between friends and family, and many people can be afraid of being judged for their financial decisions. However, if someone you know is in serious debt and needs help, there are several simple things you can do to help them in their time of need.
Take care of yourself first
While it might sound like an odd piece of advice, the best thing you can do to help a friend in debt is to take care of your own financial plans and budget first. Remember, it is difficult to help someone in trouble when your own accounts are not secure.
Always take care to pay your own debts on time, and ensure that you stick to a budget throughout each month. If a friend asks you for money to pay their own debt, it is a good idea to say no – a good practice to assume that any money you lend to a friend will be taken as a gift, and will not be paid back.
If you do need to lend someone money, write an arrangement between yourselves that states the amount you are lending, when it will be paid back by, and ask them to sign the document with you so that you have a commitment from them to pay you back in writing.
Talk about money
While many people might want to keep their financial decisions private, talking with your friend or family about money can be a great place to start helping them.
While it is a good idea to avoid asking very personal questions, understanding how your friend spends and saves money can give you a good understanding of their relationship with money.
Work on a budget together
A great way to deal with debt is to create a budget – and if your friend doesn’t already have one, a good idea is to sit with them and help them create one.
People sometimes fall into debt when they do not keep track of their expenses, or do not plan out how they need to spend their income. By creating a budget, you can help your friend understand their financial situation, as well as manage their income to repay their debts on time.
If your friend is ready to get started, why not try our handy monthly planner?
Find great support
If your friend doesn’t feel comfortable talking about their own financial situation or if you feel they need extra support, consider asking them to contact a business that specializes in debt counseling.
A great debt counselor will help a person settle their debts by teaching them about money, giving practical budgeting tips, and will sometimes help a person re-negotiate their debts into a more affordable package that can be paid off under either longer or more affordable terms.
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- Peers and Money - how to handle it
- What your Parents never taught you about Managing Money
- Why Friends and Money Don’t Mix