We all know that as finances have been squeezed tighter than they ever have been that people have had to find different ways to access cash when they have fallen short at the end of the month.
People have approached banks for extensions on their overdrafts and others have gone to payday lenders when they have realised that they are approaching a sticky monetary situation. Many others have gone to the bank of Mum and Dad – a trend which seems to be gathering pace as many people realise that this is probably the only way to get the cash they need without extortionate interest rates.
As with everything though there are always downsides to every scenario and it appears that borrowing from the bank of mum and dad isn’t all that it is cracked up to be either.
According to a recent survey, around 39 per cent of people that have borrowed from their parents say that the relationship with their mum and dad has been soured because of their money situation, with 22 per cent saying that relationships with siblings have also become strained because of the money that has been borrowed.
The UK-wide survey highlighted that one in six parents haven’t told siblings of what they have loaned their other child(ren) as they feel it would cause even more friction between the family. Nearly 81 per cent of those questioned said that they felt guilty about having to borrow money from their parents, with half of these saying they ‘regretted’ having to go down this route.
We fully appreciate that as people struggle against the financial tide that mums and dads are going to be called on far more regularly, but people must be aware that the strains that this can put on families can be monumental. People who borrow from their parents should be prepared and able to pay the money back.
Whether people agree with us or not, we believe it is a good idea to get a document drawn up so that everyone knows where they stand. Many people would think this is an outrageous idea and that families should have unwritten rules in place, but we think this would actually stop family disputes. Think about it, if everyone is singing off the same hymn sheet then there are no discrepancies and there is no confusion as to what is expected with regards making repayments.
People would be wise to heed our advice, especially when latest figures show that there has been a 14 per cent rise in families going to court over repayments and loans that have ended in dispute. If needs be families should get legal advice and have a legal document drawn up. This doesn’t mean that there is a lack of trust between the family, quite the opposite – it gives everyone concerned something to adhere to in writing so that everyone knows where they stand.
Parents naturally want to help out their children, especially in times of hardship, but it isn’t worth risking a good relationship for – that’s why we honestly believe if a document is in place, and everyone agrees with it, people will be much happier and far more content with the situation and the setup.