Asking for money isn't an easy task, particularly when you're asking the people who supported you emotionally, physically and financially for many years. However, whether you're struggling to make ends meet through college or you're excitedly planning the purchase of your first home, your parents are in your corner. Before dashing off to the “Bank of Dad,” take some time to consider your parents' financial situation and your own, plan your course of action and be prepared to follow through on repayment.
Consider Your Options
Family and finances can result in a fiasco, so consider alternative loan sources before approaching your parents for money. If you're in college, you can look for an on-campus job or inquire with the financial aid office about an emergency loan. If you’re supporting yourself and the bills are surpassing your budget, apply for relief measures from municipal or state government agencies, such as affordable housing, food stamps or low-income home energy assistance programs to ease electricity and heating bills. If your need for a loan stems from a growing business, consider bank business loans or government grant programs.
Before asking your parents for money, consider the conversation ahead of time. Try to put yourself in their shoes, thinking about whether they will worry over your situation or be concerned over yet another loan request. Consider their financial situation, too, and whether they have the money available to loan; having to refuse your request for the loan may distress your parents if they can’t afford to lend you the cash. Prepare a loan repayment plan to demonstrate that this is indeed a loan, not a gift. If you’re asking for a hefty sum of money, create a budget to show your parents a responsible plan to get back on track.
If you need a loan for a “to die for” pair of shoes, don't tell your parents that you're short on groceries this month -- your mom might just recognize the designer label the next time she drops by. If you've completely blown your month's budget due to poor money management, don't try to lay the blame on a missed paycheck or an unexpected bill. Instead, be up front and honest about the financial crisis and let your parents know how you intend to avoid making the same mistake again. If you need the loan, but can’t commit to a repayment schedule, be honest about this, too.
Write It Out
Your parents may feel comfortable lending $50 on your promise to repay, but a large amount of money might make them ill at ease, particularly if their bank balance isn’t seven digits long. Bring more than your word to the table if you’re asking for a large sum; write out a contract that spells out the terms of repayment. Not only does this show your parents that you are prepared and responsible, it creates a formal contract, removing a small amount of the personal gesture from the agreement and creating separateness between your relationship and your financial arrangement. if the money is for a business start-up, present them with a detailed business plan, too.
- U.S. Department of Health and Human Services - Office of Community Services: Low Income Home Energy Assistance Program (LIHEAP)
- Bankrate: Tough Love: When Grown Kids Ask for Money
- U.S. News: Money: 4 Steps to Take If You Loan Money to Friends or Family
- The U.S. Small Business Administration: 6 Tips for Borrowing Startup Funds from Friends or Family
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