Lending money to friends or family may damage your relationships.
A wise man once wrote, Do not be one who strikes hands in pledge or who puts up security for debts.
Consider the worst when planning to lend or co-sign. Do you need that money back? What if they don’t repay? If you can afford the loss consider giving instead. If you can’t afford the loss, then don’t loan or co-sign.
I help many clients make inter-generational gifts. When done properly and with the right expectations for giver and recipients, they are beautiful expression of love–an advance of an inheritance in many cases.
You wouldn’t want to enable the recipient to an affordable lifestyle. You wouldn’t want them to become dependent upon future gifts. But you want them to enjoy your gift in a way that helps them with something sooner, while you are living. In a very real sense you are advancing an inheritance–something you can afford to do and that doesn’t necessarily greatly impact your future.
Plan appropriately, set expectations, and give generously. Enjoy the process.