Money can get in the way of friendships for a variety of reasons. Here are some tips to avoid the most common problems that cause friction and create misunderstanding.
1. Exercise judgment when talking about money.
When it comes to money, people have different views about how much information they want to share with their friends. You may feel comfortable telling your friend precisely how much you earn or how much you have in your bank account but your friend may not.
To make sure you aren’t off-putting to someone who doesn’t think just like you, be judicious in asking questions about a friend’s financial status and don’t pry when you sense someone feels uncomfortable. For example, a friend may not want to disclose how much her husband makes, or how much she spent for an expensive handbag or shoes. Don’t get insulted.
Similarly, you have the right to say no when others ask you about financial issues you don’t want to discuss. Be mindful to never brag about money.
Related to this, people often wonder whether they should ask co-workers how much they earn. While the National Labor Relations Act protects the right of workers to ask and disclose job salaries, doing so can create tension among employees and antagonize employers. If you feel the need to ask a co-worker about his/her salary, make sure it’s someone you trust, do so outside the workplace, and be prepared that the other person may be reluctant to respond.
2. Be sensitive about income disparities.
Friends often have vastly different incomes. For instance, one friend may work at a high paying job in the financial services sector while another works at a struggling non-profit serving indigent populations. The differences may be even more pronounced if one friend is employed and the other has recently lost a job. Even when two friends are both unemployed, one may have prepared financially for that eventuality or have the benefit of an inheritance while the other is struggling to make ends meet.
Friends need to find ways to navigate these differences so they don’t create unnecessary tension. If your friend can’t afford to dine at fancy restaurants or take expensive vacations, don’t place her in that position. Find things you can both comfortably afford. Rather than splitting a bill, ask for separate checks. If you can afford to take her out for a special occasion, insist on picking up the tab.
When it comes to money, don’t focus on the differences between you. Instead, focus on the bonds you share that created the foundation for your friendship.
3. Recognize that friends can have different values about money.
Irrespective of income, people often have different ideas when it comes to money. Some people are extravagant while others tend towards being thrifty. Unless your friend’s use of money is endangering her welfare (e.g. she’s gambling to excess or investing in risky stocks), adopting a “live and let live” attitude can help lessen the tensions that might arise.
By the same token, it is easy to get caught up in the excitement of being with a big spender when she’s shopping or placing bets at a casino. Make sure you don’t get sucked into making purchases or spending money in ways you’ll later regret.
From another perspective: if you tend towards excess, don’t pressure others to assume the same lifestyle. Make sure you aren’t an enabler who encourages others to make bad financial decisions. Even a gift that seems excessive can make the beneficiary feel uncomfortable.
4. Keep jealousy and envy in check.
It’s natural to compare yourself to your friends and, if you find yourself always feeling like you’re coming up at the short end of the stick, it can be destabilizing for a friendship.
Make every effort to catch yourself in the act. If you’re feeling jealous of your friend’s money, remember that money doesn’t necessarily buy happiness. If you have less money or fewer material comforts than your friend, recognize that you have other assets that you bring to the relationship and that friends don’t have to be equal along every dimension or at every point in time. For example, your friend may envy your sense of style or ability to make other people feel comfortable.
5. Be especially cautious about borrowing or loaning money.
Borrowing money often creates misunderstandings and resentments, even between very close friends. For one thing, it’s hard to ask a friend for money, even if you’re desperate, and it’s hard to say no when a friend asks, even if you really can’t afford it.
It’s all too common for friendships to erode when loans aren’t repaid or are repaid too slowly.
The best advice? Be clear about the terms of the loan; it may even help to put it in writing. Make sure this is going to be a one-time or infrequent occurrence and you aren’t being placed in the situation of continually bailing a friend out of financial problems. Most importantly, never loan money you can’t afford to lose.