Loaning Money to Friends: A Personality Perspective

“Never loan money to friends.” This might be one of the most repeated tidbits of financial advice that we hear. It conveys a warning: friendships are valuable, and loans are risky. It’s not worth losing a friend over a loan (and you don’t want to lose your money either).

Are certain personality types more likely to buy into this advice, or to ignore it?

To investigate this question, we asked our readers whether they agreed or disagreed with the following statement: “You are comfortable loaning money to friends.” Overall, 55% of readers agreed, and the results didn’t show any personality types that were overwhelmingly in favor of or against loaning money to friends. This might suggest that, for our readers, a lot depends on the specific circumstances of a given situation.

Even so, the results did demonstrate some broad patterns about how our personality traits influence our comfort with lending money to friends. We saw notable variations between every trait pairing except the Identity personality aspect. Let’s dig into these results in more detail below.

Roles

Diplomats (64% agreeing)

The largest gap in the results was between Feeling personality types like Diplomats and Thinking types (61% vs. 49% agreeing). Diplomats tend to be quite sympathetic and usually want to help people in whatever way they can, so it’s no surprise that a majority of those surveyed reported being comfortable loaning money to friends.

Empathy is a powerful motivator for Diplomats. They feel the need of another person and may not probe as deeply for practical concerns or risks. In fact, as Intuitive types, they may choose to focus more on all the new possibilities that a friendly loan could open up.

Campaigners agreed with our statement more than any other personality type (69%). Campaigners are among the most optimistic personalities, and they tend to form deep social relationships. They love to throw their support behind a worthy cause – whether that’s helping a friend get out of a tight financial spot or helping them with seed money to get a big idea off the ground.

Explorers (59%)

With their shared Prospecting personality trait, Explorers were not far behind Diplomats in this study. Explorers are always spotting opportunities, from helping out their friends to making (sometimes risky) investments. They’re more comfortable taking chances in general. They also tend to act more impulsively, perhaps lending money without thinking through the potential consequences.

Explorers with the Feeling personality trait were more open to the idea of loaning money to friends. Still, as a group, only a small majority of Explorers agreed with our statement, showing that their pragmatic Observant trait makes them more cautious in this regard than we might expect.

Analysts (52%)

Analysts were almost evenly split in their agreement. They may sometimes feel torn between their Intuitive trait – the imaginative side of their personality that can envision exciting new possibilities or rewards – and their Thinking trait – the rational side that makes them skeptical of the benefits and wary of the risks of lending money to friends. Analysts value their friends, but they also want to make logical choices that work for their own lives.

Debaters were an interesting outlier in this study, as the only Analyst personality type to agree in a majority (63%). Debaters tend to be comfortable with risk. As Extraverts and Prospecting types, they often enjoy intellectual and social experiments. Nothing pleases a Debater quite like challenging conventional wisdom and proving even their own expectations wrong.

Sentinels (49%)

Sentinels were the least likely Role to agree with our statement. Their responses were somewhat divided by the Feeling and Thinking traits, but nearly half indicated that they do feel comfortable lending money to friends.

In general, though, Sentinels are more conservative than other personality types when it comes to money matters. Their combination of Observant and Judging traits makes them realistic, practical, and sensible. As much as they may want to help a friend, if a loan seems too risky, most Sentinels will probably put their own financial security (and their family’s) first.

This is especially true of Logisticians, who agreed with our statement at the lowest rate (37%). Logisticians are careful, judicious personality types. They tend to see reliance on other people as a weakness. This makes them less receptive to requests for money, even from trustworthy friends. Before they make any decisions, though, they’ll probably want to consider a number of financial factors. Then they’ll either make a firm plan for a loan with clear, specific terms, or they’ll just say no.

Strategies

People Mastery and Social Engagement (62% and 59%)

Extraverts were more likely than Introverts to agree that they’re comfortable loaning money to friends (60% vs. 53%). Extraverted People Masters and Social Engagers enjoy building strong networks of friends and close personal relationships. Their openness to the idea of loaning money probably reflects their belief that, should they ever find themselves in financial trouble, their friends would return the favor. Assertive People Masters appeared to be slightly more confident that, even if a loan were to create some awkward circumstances, they could rely on their people skills to work things out.

Confident Individualism and Constant Improvement (53% each)

Introverted Confident Individualists and Constant Improvers, on the other hand, tend to prefer their independence and may dislike the idea of getting themselves financially tangled with a friend by loaning money. It can take a long time for Introverts to develop the trust to let people into their lives, and these personalities appear to be more hesitant about making decisions that could potentially jeopardize their highly valued friendships.

Conclusions

Whether it’s to bail a friend out of financial trouble or to support an exciting new venture, loaning money to friends is a tricky proposition. Our study shows that individuals who prioritize social, emotional relationships (Extraverted and Feeling personalities) and who are more open to risk and new experiences (Intuitive and Prospecting personalities) are more likely to feel comfortable loaning money to friends.

Some individuals, regardless of their personality traits, simply won’t loan money to friends as a personal policy, valuing their friendship above all else.

Discomfort with lending money to friends shouldn’t be mistaken for a lack of generosity. Many people do decide to extend personal loans to friends even if they don’t feel completely comfortable doing it. More importantly, generosity comes in many forms. Lending a friend your emotional support, your time, your creativity, or your expertise can often do more good for them in the long run than lending money can.

What would you do if a friend asked you for a loan? How do you think your personality type would influence your decision? Share your thoughts in the comments below.