Friends and Money: Quick Fixes for 5 Common Problems

Dr. Irene S. Levine
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Dr. Irene S. Levine

While income inequality is a political issue, it can also get personal. How much we make and how much we spend is often a source of friction in friendships, even very good ones.

Friends and Money: Quick Fixes for 5 Common Problems

Here are 5 common money problems that crop up between friends with suggestions for how you might resolve them:

1) Friends who make more money than you do

Even if two friends start out as equals, lives and careers often follow different trajectories. One friend may be career-driven while the other is a stay-at-home mom. Or your friend may have a high-powered, high-paying position in finance while you work at a far more rewarding, but lower-paying job at a social service agency. It can be uncomfortable when friends can’t afford the same types of vacations, restaurants, entertainment or lifestyle.

What do you do?

Limit your plans to activities that you can afford without compromising your budget. If you wind up eating at an upscale restaurant, ask for separate checks in advance so you can control the cost of your meal and the liquor tab.

Be candid and explain that you’re trying to live within your means. Resist the urge to blow your budget to “keep up with the Joneses.” Instead, propose no-cost or low-cost activities you both enjoy (e.g., hikes, visits to free museums, etc.). You might invite your friend to your home to watch a Netflix movie.

2) Friends who make less money than you do

Conversely, you may find yourself on the other side of the equation: Your best friend doesn’t have nearly the same discretionary income as you do. If she’s been unemployed for a few months, for example, she may be short on funds for entertainment.

What to do?

Be just as sensitive to your friend’s situation as you would want her to be to yours. Don’t brag about your latest raise or flaunt your latest purchases. Your friend is well aware of the income discrepancies between you. Try to focus on what you have in common rather than the differences. If you can afford to treat her on occasion, do so graciously.

3) Friends who ask to borrow money

From time to time, friends can find themselves in a legitimate financial pinch — for example, they may have suffered a loss of some kind (such as fire or theft) or incurred unexpected medical costs.

What to do?

Evaluate the situation and your relationship. If your close friend has a temporary financial crisis, you may want to bail her out if you can. After all, that’s what friends are for. But if your friend is only a peripheral acquaintance or she is continually asking to borrow money, which can create tension in a relationship, you may simply need to say, “No.”

If you decide to lend a friend a substantial amount of money, discuss plans for how and when it will be repaid. (Depending on the amount, you might even want to put it in writing.) In any case, never loan money that you can’t afford to lose.

4) Friends who spend lavishly

Your friend is a shopaholic and she can’t resist dropping her paycheck for luxury designer goods. You’re far more conservative and planful when it comes to making major purchases. It's become painful to go shopping together because you can’t stand watching her waste her money. Moreover, you sometimes succumb to the contagion of buying things you don’t necessarily want or need.

What to do?

Unless your friend is spending money she can’t afford to spend, try not to judge. People have different values when it comes to spending. Perhaps, you would be better off shopping with someone else.

5) Friends who are cheap

You consider yourself a generous person with healthy attitudes about spending. But whatever the situation, your best friend is always counting every penny in her purse. You want to go to an upscale restaurant to celebrate your birthday and although she can well afford it, she prefers to eat at moderately priced chain. You are dying to plan a girlfriend’s getaway at a luxury resort for your big birthday but she can’t stand the idea of wasting money on a hotel. She’s researching inexpensive serviced-apartments you could stay at.

What to do?

Your friend’s attitudes about money are probably as firmly entrenched as yours. Bear in mind that they may have more to do with her upbringing or past experiences than with her feelings about the friendship. Trying to change her or convert her to your spending style is likely to be futile. To maintain the friendship, talk about your different styles and find ways to compromise. You may come to realize she’s not the right travel companion for a luxury getaway but you value the friendship enough to enjoy doing many things together on the cheap.

The bottom line

Differences in income and spending can create a wedge between friends. If your friendship has a strong foundation, you should be able to talk about these differences, work them out and maintain a focus on what you have in common.

Has there been an instance when money got in the way of your friendship?