MyMoney Online, Personal Finance with Warren Ingram

Lending money to family – what to do, and what not to do

You should almost never lend money to your family or sign surety on a loan, especially not for your adult children, warns personal finance expert (Galileo Capital) Warren Ingram.

According to a survey by Bankrate.com, about half of adults (46%) who lend money to their adult children never get it back.

Besides, the lending of money also damages relationships between family members, even when the money is repaid.

The Money Show’s Bruce Whitfield asked Ingram what to do and what not to do.

What not to do

  • Don’t ever sign surety for a loan on behalf of your adult children. Even if they are going to start a business or buy a business that seems amazing, the risks of failure are always high.

  • Don’t lend money to adult children to buy a home unless you have a bond on the property.

  • Don’t hand them your credit card to assist with expenses.

What to do

  • Any loans that you make to adult children should be done with money that you can afford to lose.

  • If you are going to lend them a substantial amount, ensure that you have a proper legal agreement done by a lawyer that stipulates amounts, dates, repayment schedules, interest rates, etc.

  • If you want to help your children, consider donating money to them on an annual basis. You can donate R100 000 per year tax-free.

For more detail, listen to the interview in the audio below.

Get the 10 most-read articles of the week from Bruce Whitfield’s The Money Show, emailed to you every Friday morning:

Subscribe to our Business Wrap Newsletter


Recommended

by NEWSROOM AI
Read More
South Africans are drowning in debt but still clamouring for credit

South Africans are drowning in debt but still clamouring for credit

Loans sharks are having a field day and there's an organised crime element, says personal finance journalist Maya Fischer-French.

Used-car buyer? Save yourself a world of pain by asking this one question

Used-car buyer? Save yourself a world of pain by asking this one question

Wendy Knowler says dealerships don’t do much to explain how you may unknowingly void your warranty and service/maintenance plans.

No petrol money? 'Dudu Myeni has known about the court dates for two years'

No petrol money? 'Dudu Myeni has known about the court dates for two years'

The former SAA Chair says she can’t get to court; she doesn’t have money for petrol. Outa says it'll pay to get her there.

'Emigration is draining skills, destroying the future of South Africa’s economy'

'Emigration is draining skills, destroying the future of South Africa’s economy'

Small business guru Pavlo Phitidis shares shocking anecdotes and advises business owners on how to address this challenge.

Alcohol-free ‘Breva’ taps into the huge market of non-drinking South Africans

Alcohol-free ‘Breva’ taps into the huge market of non-drinking South Africans

Meet Gladys Mawoneke, MD of beverage maker Bumi Hills Group, bottler and manufacturer of the non-alcohol malt drink Breva.

Popular articles
Number of COVID-19 positive cases rises to 1,686, one death confirmed

Number of COVID-19 positive cases rises to 1,686, one death confirmed

According to the Department of Health, this is an increase of 31 from the previously reported cases

Make Money Mondays: Karen Zoid in a time of coronavirus

Make Money Mondays: Karen Zoid in a time of coronavirus

Musician and television host at Republiek van Zoid Afrika says because of COVID-19people are all the same now.

How are local non-profit organisations impacted by COVID-19 and shutdown?

How are local non-profit organisations impacted by COVID-19 and shutdown?

Charities Aid Foundation Southern Africa CEO Gill Bates says the main concern is those organisations that are on the fringes.

In the new world of virtual meetings and interviews, what are the ground rules?

In the new world of virtual meetings and interviews, what are the ground rules?

World Wide Worx MD Arthur Goldstuck gives tips on what to do during an interview on Skype or something similar.

SARB warns that the economy may shrink by up to 4% due to coronavirus

SARB warns that the economy may shrink by up to 4% due to coronavirus

George Glynos, head of research at ETM Analytics, says the those lockdowns are likely to be extended for longer than 21 days.

Matric revision podcast by Gauteng Education Department --- working with 702

Matric revision podcast by Gauteng Education Department --- working with 702

Pupils are able to access the podcast lessons at anytime that is suitable for them in the comfort of their homes.

Include persons living with disabilities in fight against COVID-19 - ministry

Include persons living with disabilities in fight against COVID-19 - ministry

Deputy Minister Hlengiwe Mkhize spoke about how containment measures can be isolating for those who rely on the support of others.

TV personality Vinolia 'V-Mash' Mashego passes away

TV personality Vinolia 'V-Mash' Mashego passes away

The family says the former Jam Alley presenter passed away in her sleep.

Grandmother of killed Soweto girl pleads with community to volunteer info

Grandmother of killed Soweto girl pleads with community to volunteer info

EWN reporter Mia Lindeque says the grandmother says if there wasn't a lockdown people would have stopped the culprits.

Company pledges 20,000 face shields in fight against COVID-19

Company pledges 20,000 face shields in fight against COVID-19

Dispak Group has pledged 10,000 face shields to the Gauteng Health Department and another 10,000 to healthcare workers.