What to do when your friends make more (or less) money than you do
There’s a timeless Friends episode that depicts a sensitive, important topic we seldom discuss within our inner tribe: money. Let me refresh your memory. In the episode, the friends are divided when it comes to doing something “nice” for Ross’ birthday. Chandler, Monica, and Ross, the friends with the higher-paying jobs, have no problem splurging on an expensive dinner and tickets to a Hootie & the Blowfish concert. However, Phoebe, Rachel, and Joey, the friends earning less money, do. There’s an awkward moment when the latter trio admits they don’t make as much. And while the former group says they’re comfortable talking about money with each other, it’s pretty obvious they aren’t.
Our favorite six pals aren’t alone. Money is an awkward subject when it comes to our friendships no matter how much or how little you have. Maybe you’ve felt ashamed that you’re still renting a two-bedroom apartment with three roommates while your friends are buying homes. Or maybe you’ve had to bow out of birthday parties because you couldn’t justify buying $15 cocktails. You’re certainly not obligated to discuss money with your friends. But if you find that the topic is driving a wedge between you and your squad, then you might want to bite the bullet and start the conversation.
Before you dive in, it’s important to be aware that it may be awkward. A Fall 2018 Merrill Edge Report revealed Americans do pretty much anything to avoid a “money talk.” In fact, respondents ranked nearly all major relationship milestones ahead of discussing their salary, including meeting the family, being intimate, traveling together, and talking politics.
“Many find the topic uncomfortable, so, as you start a money dialogue with friends and loved ones, approach the conversation without judgment and remember that each financial journey is different,” Anna Colton, Northeast Consumer Banking & Investments Strategic Planning and Division Executive at Bank of America, told HelloGiggles. “When beginning conversations about finances with friends and significant others, it’s important to remember everyone has a different relationship with money. Some grew up in a household where money was a taboo topic, while other families spoke openly about their financial situation.”
Still, it is possible to have the money talk with your friends. Here are some strategies to use the next time your friends suggest attending a Hootie & the Blowfish concert, but you just want to hang out at the coffee house.
Being candid about why you’re opening up the discussion is the best way to go. “The key is to first ask yourself why you’re curious about a friend’s financial situation. If you’re really just being over curious, it may be best to not ask, especially if you think it would create an issue,” Dana Marineau, Credit Karma’s financial advocate, told HelloGiggles. “But, if it’s because you want advice or guidance—maybe a friend has a similar job to you and you want to revisit your earning potential, for instance—be sure to lead with that so they know your intentions.”
If you feel like you can’t keep up with your friends’ spending habits, then make that clear. It might be awkward, but at least everyone will be on the same page moving forward. “A good conversation starter could be to talk about what your long-term goals are—having kids, buying a home, buying a car, paying off loans, etc.—and easing into a conversation about planning and saving for those events based on your finances,” says Marineau. For example, “I’d love to go away on a girls’ weekend, but I’m saving up to buy a car. How can we spend time together in a different way?”
Ultimately, be honest with your friend group. “There’s no reason to be ashamed of being unable to afford a night out or a pricey vacation,” says Marineau. “Share as much about your financial situation as you’re comfortable sharing to set expectations with your friends. This way, for future events and activities, they will hopefully be thoughtful during the planning process and won’t be offended if you bow out due to cost.”
Don’t assume you know the truth about someone’s financial situation
Financial issues are hugely personal. And if Instagram has taught us anything, we shouldn’t believe everything we see. In other words, just because someone is thrifty doesn’t mean they’re poor. Likewise, just because someone’s throwing around dollar bills doesn’t mean they’ve got Kardashian amounts of money. “It’s important to remember that finances vary by person, and people budget and spend very differently,” says Marineau. “There are a variety of factors that contribute to someone’s perception of wealth: their living situation, the area or city they live in, their income, any debts they have, and many more.”
At the same token, it’s important to consider that everyone has their own unique spending priorities and financial goals. “While some people may prioritize a FIRE (financial independence, retire early) plan focusing on reducing spending and increasing investments for early retirement, others may prefer to spend more of their budget on more immediate interests or entertainment,” says Colton. “Similarly, some people may choose to prioritize saving for a home while others might want to focus on saving for travel.”
Which is why clarity can help when your spending priorities don’t align with a friend’s. “Be respectful and think about where your spending priorities do align,” suggests Colton. “Maybe you both love trying trendy new restaurants or going to the movies. Whatever your interests, try to find common ground and look for ways you both can enjoy spending time together.”
Whether you earn less or more than your friends, “money is often an overwhelming topic that many don’t want to discuss because it stresses them out,” says Marineau. “Our culture, history, upbringing, work, friends, and class all have an impact on our money mindset and the way we view money. In some cases, money can be a sensitive topic, especially for those who know what it’s like to live on less. Keep in mind that everyone may not be as open as you at first to talk about money.”
A common problem that can arise is if a friend has explicitly shared they cannot or should not do something because they can’t afford it, and you pressure them to participate anyway, says Marineau. “They are sharing this personal information for a reason, and you hopefully will take that into consideration when making plans for the group.”
Which is why compromise and sympathy are key when it comes to money and friends. “If you currently earn or once earned on the lower side, remember to share why it’s important that you spend within your means to help your friends understand your situation,” she says. “If you currently earn more or once earned more than a friend, keep in mind that not everyone may be in as fortunate of a position as you, and you should be sensitive to their budget and goals.”
When you initiate a conversation about money, you never know what speaking truthfully about your finances will reveal
Others in your friend group may feel the same way or be in a similar situation, and kickstarting that conversation could help them be more open about their finances. Ultimately, don’t let money ruin a good friendship. As Marineau points out, “there will always been fun, engaging activities at price points. Keep an open mind, do your research, and find a middle ground.” And if you have some unique tips and tricks that helped you reach a certain financial goal, you might want to share to help others, too.