When friends and money collide: Navigating the financial divide

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When friends and money collide: Navigating the financial divide


This article is being presented in partnership with the Society of Grownups.

We've all been there: Dinner out with your friends is going great. The food is fantastic, and the conversation is even better.

Then the bill arrives, and suddenly things take a turn for the awkward. One person suggests splitting the check evenly, but another friend chimes in to say he only ordered an appetizer.

Despite everyone's best intentions, things can get uncomfortable when budgets don't match up.

Money can be a taboo topic. A 2015 survey from Ally Bank found that nearly two-thirds of respondents believe it's rude or inappropriate to discuss personal money matters socially.

After all, things such as your upbringing, income, expenses, attitudes toward money and level of debt are highly personal to some people, and any two friends may not be in the same financial situation.

But conversations with friends about money can be productive -- not a minefield. You can learn a lot about each other this way, and these conversations may help you better understand the similarities and differences in the way everyone spends and saves.

Below I'll share some tips for making this possible.

Stay honest and remove the awkwardness.

There can be a lot of shame and judgment wrapped up in the money we make and spend. And when we make friends as adults, we don't have as much context for each other's attitudes about money.

The good news? Sometimes all it takes is for one bold friend to communicate his or her budget constraints, and it opens the door for others in the group to express their restrictions, too.

It's easy to succumb to peer pressure, but saying "no" to an idea, asking for help paying, or offering an inexpensive alternative plan are often the best ways to avoid common money-related quarrels.

If you don't feel comfortable telling the whole group about your limitations, consider communicating with one close, trustworthy friend. This way, you'll gain a "budget ally" who can also speak up if a group outing is too expensive.

Being honest about your budget, whether it's with one friend or a whole group, can go a long way in strengthening friendships.

If you have a bigger budget than your friends, showing a willingness to adjust plans accordingly -- or help out on occasion if it's within your comfort zone -- can go a long way. Here are a few strategies for navigating different money situations within your group of friends.

If you're on a budget

From dinners to vacations, it can be difficult to tell friends you're focused more on saving than spending, but staying lighthearted and keeping things in perspective can go a long way for everyone involved.

Here are a few ways to be kind to your budget when others are ready and willing to spend.

1. Cut costs without cutting out experiences.

Being savvy about where you spend and where you save can go a long way. For example, getting together to cook a group dinner is often more budget-friendly (and likely more memorable) than sitting around a restaurant table.

And sharing a hotel room or an Airbnb instead of having everyone stay solo means you'll get more quality time with friends and have more money to spend elsewhere on the trip.

2. Become an expert at finding free activities.

Whether you're at home or on vacation, a little bit of research should uncover plenty of cost-free, local events<. A quick search for "free events in [insert town]" or subscribing to local newsletters should give you a lot to work with. For example, Broke-Ass Stuart lists upcoming free events in San Francisco and New York.

If your group likes spending time outdoors, consider scoping out the best spots for a scenic hike or bike ride.

By designating yourself the "free-activity planner" of the group, you'll have more control over spending while still making sure there are plenty of plans to match everyone's interests.

3. Have a go-to peer pressure plan.

It's easy to get swept up in all the spending going on around you, but it can help to have a strategy in place to resist temptation and stick to your budget.

For example, if using your credit card feels like it's not real money (until the bill arrives), try taking only a small amount of cash with you to the mall.

Or, if you're on a shopping trip with friends and they're swiping their credit cards at all the high-end stores, try having a go-to reason for saving.

Lightly saying "that down payment (or wedding or dream vacation) isn't going to pay for itself" typically conveys everything you need without making the conversation too serious.

If you've got more to spend

Those who are on a stricter budget aren't the only ones with money-related problems. If you're the friend with higher spending capacity, you may run into difficulties too.

Here are a few ways to make sure those differences don't impact your friendships.

1. Know that small gestures can go a long way.

From buying your friend's happy hour drink on occasion to covering his entrance fee to an event you're both excited about, the little things can make a big difference when someone's trying to save as much as he or she can.

Just be sure to get a clear sense from your friend when it's appropriate to offer help. (You don't want to come off as a high-roller or that you pity your friend.)

2. Master the art of compromise.

When it comes to differing finances, no one should feel like they're giving things up -- and no one has to if you approach it in the right way.

One of the most common times you may need to compromise with friends is during group vacation planning.

If a friend on a budget can't go on vacation because of the hefty price tag, consider offering alternative options. That less touristy spot may be closer to home and have the same amenities as your top-choice destination -- without the big expenses or crowds. And wouldn't it make the trip more awesome if your friend were there, too?

3. Be conscious of unintentional peer pressure.

Your shopping trip may seem more fun if everyone is buying, but not everyone can afford the same things. While you shouldn't feel bad about your own spending habits, it's helpful to remind yourself not to pressure that friend on a budget to buy more than he or she is comfortable with. Focus on the time spent together rather than the things you buy.

Your friend on a budget probably has some great opinions to offer about the new clothes you're considering, even if he isn't buying for himself.

The when, where and how of having money conversations

It can feel a little bit awkward at first to discuss money with your friends, but you might find that an open and honest conversation about money will go a long way.

Some of these suggestions can be implemented on the spot, but many situations require a bigger conversation. In those cases, it's best to talk in private with close friends at a time when you have each other's undivided attention.

Consider planning a quiet meal or coffee to set the scene for a serious chat.

The most important thing to remember is that everyone is different, and money doesn't have to be a competition.

About the Author: Before joining Society of Grownups, Tyler Dolan was a financial planner at The Financial Advisors, LLC in Newburyport, MA helping clients reach their financial goals. Tyler is a Certified Financial Planner™ professional who graduated from Bentley University with a master's degree in personal financial planning. He believes that financial education can empower people to reach their goals.

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