Kevin O’Leary reveals the worst part about being a rich guy (and how he deals with the problem). How would you handle it?

O’Leary admitted that the issue wasn’t easy to tackle and he made several early missteps while handling such requests from family members before eventually finding “a path to success.” Now he has a clear rule for anyone who asks for money: It’s a one-time-only gift. The cash is offered with a firm understanding that all future requests will be turned down.

It’s simple, brutal and, at least according to O’Leary, highly effective.

And the problem isn’t limited to famous TV celebrities.

Across the income spectrum, many ordinary people face uncomfortable requests for financial assistance from their closest friends and family. Here’s why borrowing or lending to your peers can often be a mistake and what you can do to tackle such requests.

Hidden costs of “helping” loved ones

You don’t need to be fabulously wealthy for your friends and family to consider asking you for money. According to a JG Wentworth survey, roughly 53% of people have lent money to a loved one (2).

Perhaps the most common form of this financial arrangement is between a parent and their adult child. A whopping 75% of parents have offered some financial support to their adult children, according to the AARP (3).

In many cases, these financial agreements can disrupt the relationship’s natural dynamics.

For instance, 35% of parents said financially supporting their adult children causes emotional distress. Similarly, 46.6% of those who borrowed or lent money to friends and family said it led to “serious arguments or conflicts,” and 48.1% even considered taking legal action.

Simply put, a written contract or verbal agreement may not be enough to capture all the nuances of a financial agreement between loved ones. If you’re thinking about lending money to your cousin or asking your grandmother to co-own a property with you, it may be best to re-consider.

And if you’re struggling to set clear boundaries with a persistent loved one, O’Leary’s one-time gift rule isn’t the only way you can tackle the issue.

How to set boundaries (without burning bridges)

Turning down money requests can be tricky, especially if the request is earnest and raised by someone very close to you. Accepting the request to loan without any strings attached could enable their behavior, while turning them down too harshly could damage the relationship.

To strike the right balance, personal finance expert Ramit Sethi offers some advice (4).

His first suggestion is to get a deeper understanding of your own finances and future financial needs. If you don’t have a tightly monitored budget, it’s easy to lend money beyond your means. Once you have a better grasp on your numbers, you can see how much you can afford to give your friends and family; Nothing requires you to lend the entire sum if it means stretching yourself too thin.

Place a strict limit on your generosity, based on your personal finances. You could replicate Kevin O’Leary’s one-time-only policy, or suggest a fixed dollar or annual cap on how much you can give.