What should you do when someone asks you for money?

For a charity

1. Determine whether the charity is a scam and how much money is actually used to help people

   1. 3 Websites To Check To Be Informed Before Giving To Charity

2. Evaluate the charity's effectiveness. Even with the best of intentions, sometimes methods hurt rather than help.

Beggar

1. Never give money to a beggar. It will likely go to drugs, but even if it doesn't, enables them to avoid self reliance.

2. Provide a job if you can do so without taking on too much risk (e.g., theft, harm to children).

3. There are programs available that provide shelter and help finding jobs. Learn about those programs and when they might be appropriate.

4. Accept that most aren't interested in changing their life style.

5. Don't offer advice.

Family and friends

1. Recognize that it's very risky to the relationship to give or loan money.

2. If it's an emergency, it may be appropriate to just give or loan them the money if you can afford it.

3. Try to determine if their money troubles are temporary.

   1. If temporary and there's a clear plan, giving or loaning the money may be appropriate.

   2. If long term or there's no clear plan, tell them you're not able to right now, but ask if they'd like help with coming up solutions.

      1. Don't offer advice, but you can help them explore and develop a plan.

      2. Some useful tools may be personal balance sheet and cash flow statements

4. Sometimes a loan can be a mutually beneficial arrangement, which helps protect the friendship (e.g., high rate of interest vs. a crazy high credit card rate or imminent default).

5. Collateral can be useful for helping to insure repayment.