Considering today is pay day for most, the subject of lending money is always a tricky one. If a friend or family member has come to you for help out of a sticky financial situation, of course, you’ll feel that you want to help. However, before you commit (or find yourself feeling flustered), give yourself some time to take a beat and consider these five questions.

1. Can I afford it? This question is a biggie because, the bottom line is that you need to be sure that whatever amount you give won’t create a financial hurdle for you down the road. This means reviewing not just your current balance and budget, but also things like your emergency savings and upcoming bills. If you decide that, yes, you can afford to give, be sure to add the loan to your budget so it’s an expense that’s accounted for.

2. Why does my friend need the loan? Your friend brought up money first, so it’s within your right to ask for details. Some specifics to find out: Is this a onetime request or does the person have the potential to be a repeat borrower? Is the cash you’re loaning for an emergency situation (say, a medical issue or child care problem) or are you helping this person put a Band-Aid on a recurrent problem (say, a gambling addiction or rent/bond they can’t afford)? Whatever the reason, this insight is the key to understanding their financial behavior so you can make a clear decision. Bottom line: If you don’t feel good about the reason, don’t lend the money.

3. Will this make our relationship awkward? No one wants to talk about money. But a loan immediately adds a business element to your friendship, so you have to prepare for any tension this might create. One way to reduce awkwardness is to be crystal clear with each other. This means everything from setting up a repayment plan to talking through how you’ll handle late payments and status updates. If you can’t imagine this relationship not feeling awkward, you might want to take a pass.

4. What’s the repayment plan? Now that you’re seriously considering the loan, it doesn’t matter how close your friendship is—you need to spell out the specifics of your agreement and put it in writing, too.

5. What’s the worst case scenario? In other words, what happens if your friend isn’t able to pay you back? Could you handle eating the cost? Would it destroy your relationship? Many financial experts encourage would-be lenders to think of a loan to a friend as a gift. If you get paid back, that’s great news; but if not, you still feel OK about it and aren’t left harboring resentment.

There is also a nice way to say “No.” The best way to do it is to simply be direct. Try: “I’m just not in a position to give right now” or “I don’t feel comfortable loaning money. I’m sorry I can’t help.”