Money and family are two things that rarely mix together well. By loaning money to your loved ones, you open yourself up to the possibility of never getting paid back.
One teen on Reddit saved a huge chunk of cash by being financially responsible. Rather than applauding their child’s impressive financial skills, their parents want to take advantage of their savings to help out their other child.
The teenager said their parents wanted to borrow $20,000 from them to buy their other daughter a car.
“I am 16-years-old and currently have $20,000 in the bank,” they explained in their since-deleted Reddit post. “My parents want to buy my college sister a car … but want to borrow $20,000 from my bank account and claim they will pay it back through interest.”
“Should I say yes?” they asked. “It makes me a little uncomfortable knowing that all of my money will be gone, and I will have little money left in my account.”
It turns out the young person had good plans for that money. “I plan on using the $20,000 towards college for me,” they shared
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When commenters questioned how the teen could possibly have so much money, they had an answer ready.
“Some of my money is in a CD, so that grew my money a little bit, as well as working with my dad every day of the week for a summer also grew my money,” they wrote. “Originally, my parents deposited $5,000 into the CD and I deposited the money I had been saving up since I was a lot younger.”
Commenters were completely against the idea of this teenager loaning their parents money.
As always, fellow Reddit users came through with some very strong opinions.
“I’ve heard some terrible ideas, and this beats all of them,” one person said. “If your parents can’t pay a loan with interest for your sister’s car from the bank, they certainly can’t pay you. Hard no.”
“Don’t do it,” another commenter advised. “Your sister can get a part-time job to help pay for her own car. You will never see that money again.”
“You should talk to your parents and explain that you have plans for that money. It’s important to your future. You earned it,” a third user wrote. “Your sister can get herself a cheaper car, or take the bus. It’s wrong for them to treat your money as a family fund.”
Lending large amounts of money to family members can quickly become complicated.
To make matters even more difficult for this teen, some stipulations come with loans this large, even when they’re just going to family.
Charles Schwab explained, “Before you extend a loan to family, however, be aware that it’s not as simple as just writing a check. The IRS mandates that any loan between family members be made with a signed written agreement, a fixed repayment schedule, and a minimum interest rate.”
“What’s more,” they continued, “if the loan exceeds $10,000 … you’ll need to report the interest income on your taxes.”
Investopedia acknowledged the problems that can arise from family members loaning money to each other. “Lending money to family and friends can be a gesture of goodwill when someone you know is in a tight spot financially,” they wrote, “but it can be problematic if your efforts to help lead to disagreements or you experience financial issues as a result.”
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The teen seemed to be aware of this reality and ultimately decided not to loan their parents the money.
While it can be difficult to say no to your parents, especially when you’re still a child living in their house, the teenager in this situation was able to.
In an edit to the original post, they said, “I’ve ultimately decided not to let them borrow the money as I feel it is extremely unnecessary for them to ask for $20,000 just to get a car.”
It’s good that this teen is aware that their money is theirs to spend as they see fit. It’s also good that they will continue saving for their education. Ultimately, it was simply unfair for their parents to ask to borrow money from them.
Mary-Faith Martinez is a writer for YourTango who covers entertainment, news, and human interest topics.
