It is so easy to say 'no' when strangers ask you to lend money to them. You can easily deny their financial requests. However, it becomes equally hard to say 'no' when your loved ones ask for financial help. Actually, there is nothing wrong in offering financial assistance to family and friends. However, you should do so only when it will not break your financial house.

You need to decide if you really can give out a loan to your close friend or relative. If it is bad for your financial health to lend money, then you've to learn to say 'no' to your friend.

Sometimes, people withdraw money from their retirement funds only because they can't say 'no' to their near and dear ones. This is their biggest financial mistake for they have to pay a heavy penalty to the IRS afterwards.

If you lend money to your friends when you're not feeling like doing so, then be rest assured that it will create a bad feeling in you. You may start disliking the person in future. It will surely happen if the person fails to pay off the loan. So, isn't it better to say 'no' now and keep your relationship amicable? Why should you ruin your precious relationship by lending money to your loved ones? What's the need to create hard feelings between yourselves?

Learn to dodge the financial requests from your close friends and relatives with the tips given below:

1. Empathize with the person: Don't ignore the person at all. Rather, empathize with him. Make him understand that you know what he is going through. Express your confidence in him. Listen to his problems carefully. You can talk about various ways to tackle the situation. You can call him up every other day and ask about his progress. This will make the person feel that someone is there beside him. Give him emotional support if you can't give financial support.

2. Explain your financial needs: It will be futile to lie to your loved one. He knows your financial condition very well. So, tell him why you can't actually lend money. Accept the fact that you have money. However, you can’t lend it due to your current financial obligations.

3. Give helpful suggestions: You may not be in the position to offer financial help to your friend or relative. However, you can certainly give useful suggestions to him, which will be beneficial for him in the long run. Suggest tips and strategies which will help him manage his finances in the right way. Explain him the importance of the following things:

•Making regular payments to creditors •Filing income tax returns every year •Purchasing auto, health, life and home insurance policies •Creating an emergency fund

4. Show him the right path: Suggest the name of a reliable credit counseling agency where your friend can get real financial help. A credit counselor will not give him a loan. However, the counselor can suggest the ways to overcome the financial crisis. You can even suggest him to attend personal financial workshops.

You may feel ashamed of yourself. After all, you couldn't offer financial assistance to a person who is so close to your heart. However, sometimes love has to take a backseat and you have to make some practical decisions. If you feel too guilty, then talk to someone who understands you. Share your feelings with him/her. You'll feel light and be stress-free.