Mixing Money and loved ones: casual vs. organized approach

Mixing Money and loved ones: casual vs. organized approach

Money and personal finance are huge pillars of access in life.

Spoiler alert that you’ve probably already experienced: When you invite other people into the equation, things can get… weird. 

Think about the last time money came up in a conversation with a friend, family member or even a colleague. Did you notice any changes? Did their voice change? Did their eyes start to shift around – looking for some sort of signal to indicate the extent to which they should reveal? Did their overall demeanor, body or willingness to share change at all? 

There it is. 

That funny feeling that goes by many names – awkward, uncomfortable, tricky. 

When you lend or borrow money with family members or friends, it might feel more natural to treat the transaction casually – hoping that a casual exchange might help ease the awkward tension. After all, you probably feel like you can trust your loved ones more than a bank or other financial institution, right? 

While this might feel better in the short term, this is actually a long game, and we’re still talking about money, right?


So, if you’re considering lending or borrowing money with someone you care about, bring structure into the equation instead to help eliminate the awkwardness that is very likely looming in the background. 

If you’re still on the fence about going the casual route versus a more formal personal loan, here are  four things you might consider before making a decision: 

1.) Clarity is key

There’s no room for misunderstandings when it comes to mixing money and loved ones. Clarity is a key benefit of setting up a more formal loan/IOU agreement. It provides space for both parties to ask questions and gain a better understanding of the overall situation. 

When you set up a personal loan agreement, you should spell out the terms of the loan, including the amount borrowed, the reason for the loan, the installment plan and the repayment schedule. This is important for both parties to understand and agree upon before making any money moves. 

2.) A loan agreement is not just a formality 

Let’s take a brief step back in time to clarify the word “formal.” It stems from the Latin language formalis, which is from forma meaning "a form, figure, shape.” Using this word gave people a way to root a concept or phenomenon in spoken word – helping to bring about structure and a shared understanding of something between parties. 

By taking time to formalize a transaction with a tangible agreement, the process becomes more official and professional – giving shape to an otherwise non-tangible exchange. This deliberate action demonstrates that both parties are serious about both sides of the transaction: payment and re-payment. A personal loan agreement can also help to avoid any potential issues that may arise from a casual agreement.

3.) Relationships are valuable 

Relationships are important sociologically because they help individuals and groups meet their social, emotional, economic and practical needs. Relationships contribute to the maintenance of social order and stability. They can be formed in a variety of ways and are often made stronger over time with shared experiences. 

When you engage in the exchange of money with people you know without a formal agreement and clarity, it can create unnecessary tension or put strain on a relationship. Setting up a personal loan agreement can help to protect a relationship by prioritizing clarity in the loan terms - ultimately reducing the potential for misunderstandings or disagreements. With a written agreement in place, both parties can refer to it in case of any confusion or disputes.

4.) Formality is the foundation for a sense of responsibility

When you borrow from someone (shoes, a perfectly-distressed college sweater, a few bucks, etc.) you have a responsibility to return the item or to repay the debt. Because it’s borrowed (whatever it is), there’s an inherent understanding that it will be returned to the original owner. 

By setting up a personal loan agreement, you’re baking in a sense of responsibility and accountability to return it. Taking these steps provides both parties with an understanding of when, where and how the debt is ultimately repaid. 

Relationships and money can (and oftentimes do) mix well – especially when there’s an intentional plan put in place. By having a written agreement, there is less room for confusion or misunderstandings about the terms of the loan. 

If you’re considering lending or borrowing money with someone you care about, we’re rooting for you. With the Zirtue app, you can set up a loan repayment installment plan that bakes in transparency, accountability and automation – helping real people manage their personal IOUs with loved ones.

Emily Cox
April 14, 2023
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