It’s officially the holiday season, which most adults have come to realize is also the spending season. From shopping for gifts to get-togethers with family and friends, money will flow like water in and out of your wallet, maybe even mostly out.

It’s also a time of year when many we know find themselves short of cash. Some reasons will tug at your heart, like wanting to surprise their parents, or partners, or children with special gifts. Others are as simple as making sure their dining table on red-letter days will have a feast for the family.

If you find yourself at the receiving end of a request for a loan, it may be hard to say no, especially when they time the asking during your bonus payout. But the thing is you can say no. You earned that bonus, and if it’s a choice between making their holidays merry or yours, guess which should win?

I do know it’s not easy to say no. Tough to turn down family, or old friends, and the season makes it even harder because who wants to be branded as a Scrooge? So if you must say yes and lend them money, consider these 5 steps so you don’t end up losing all of yours.

#1 Know what the loan is for

You have a right to ask this question. Sometimes, we want the awkward conversation to end so we don’t bother asking, but their answer should help you decide if you will say yes or no. One of my worst loan-related decisions was to lend money to someone to pay off another loan. That’s your sign that the person has money problems and is just moving around money to stay afloat.

• Time to stop being a 'money hero' to family and friends

#2 Never loan more than you can afford to lose

It’s not fair to you to lend money which you also need. So they can have a nice holiday while you suffer? If you are not confident you have enough, then say no. And you don’t even have to offer any reasons. Just say you don’t have spare cash at the moment so you cannot give them the loan. But if you do have spare cash, consider setting a loan budget, and be prepared not to see this money again.

Watch more News on iWantTFC

#3 Don’t say yes because of guilt

Many end up loaning money to others because they feel guilty about what they have. If you feel obligated to lend, but you also know you can’t really afford to part with the loan amount, take a step back and consider other ways you can help. It’s important that you also feel comfortable, not pressured to help. Maybe you have said yes before to that same person and you haven’t been paid back? Then don’t let guilt make you say yes again, and lose more money this time.

#4 Consider it as their holiday gift instead and write it off

If you feel your borrower has a genuine need for it, and you want to say yes, consider writing it off as your holiday gift. Maybe your friend wants to get his son a bicycle to use for school, then you can lend the amount you can afford to write off (you don’t always have to loan the amount they asked for) and say this is what I can give but no need to pay back, and enjoy the holidays. Then that’s your holiday gift to him and his family, and one loan request solved.

#5 Tell your family about it, and share with friends who need to know

One red flag among borrowers is when they ask you to keep it a secret. Chances are it’s not so much because they are ashamed for others to know, but because they have also borrowed from these people. So before you hand over the loan, consider telling your family about it (and hopefully no one among them has lent money to the same person). If you have discreet friends, you can mention it to them too. It’s not about exposing the borrower, but just checking that you are not loaning cash into a money pit.

* * *
Aneth Ng-Lim began her career as a writer and has worked as a communications specialist in the government and the private sector. She headed Consumer Education during her stint at a multinational bank.

• Borrowing from Family and Friends? 8 Tips to Keep it Strictly Business
• Tips on how to get your money back from family, friends