Real Money Talk: How to Bring up Money with Friends

Tough conversations with friends can be… well, tough. But often, it’s the topics you avoid bringing up that cause the most damage. For most people, money problems are at the top of that list.

Take it from someone who writes about money for a living – personal finance is not the most exciting topic. Beyond that, it can be embarrassing to admit when your money situation is less than ideal.

But the only way to avoid financial friction in your relationships is to tackle the issue head on. It won’t be easy, but we’ll make it simple with these practical tips.

Learn to Set Boundaries

One of the most common problems among friends is when one person wants to spend more money than the other person is comfortable with. Set boundaries with your friend by explaining that you’re on a budget and can’t afford pricey activities as often as they can.

The sooner you have this conversation, the sooner you’ll feel better about the whole situation. If you procrastinate, you might start feeling resentful toward your friend and avoid making plans in the future.

You don’t have to share your exact salary or debt totals with your friend. Just explain that you need to spend less on eating out, going to the movies or whatever activity you typically do together. Be specific and break it down for them. If your friend earns much more than you or doesn’t have student loans, they may not realize that spending $20 on brunch or $40 on concert tickets is a big deal for you.

Your friend may feel awkward about suggesting activities for a while, not knowing if you can afford them. That’s why it’s important to suggest low-cost or free alternatives, like taking a walk around your neighborhood, hosting a potluck, or having a BYOB night at the park. This step is key because it reaffirms that you want to maintain the friendship, even if it means switching up your normal routine.

It may seem easier to just avoid hanging out rather than bring up your money troubles, but this always backfires. Your friend will eventually think you just don’t want to see them, and your relationship will begin to deteriorate. Don’t let money be the reason you lose a friendship.

Don’t Assume Your Situation Is Unique

Most of us assume that if you’re not talking about money problems, you’re doing just fine. But that’s far from reality – and the Covid-19 pandemic has put more people than ever in a financial tight spot.

According to a 2020 survey, 63% of Americans said they’ve been living paycheck-to-paycheck. Even your friend who splurges on mani-pedis, takes Lyft rides everywhere, and just booked a long weekend to Cabo may be relying on a credit card to finance all her expenses.

When you bring up your own financial struggles, it gives your friend permission to be vulnerable and share her own problems. Even if she’s not dealing with the same issues, she may have gone through similar struggles in the past.

Be Honest

It sounds cliche, but being honest and open about your feelings is the first and most important step to take when talking about sensitive financial issues with your friends. If your friend is always bragging about their $10,000 bonus or judging people who shop at thrift stores, explain how their comments make you feel.

Only bring up remarks they say directly to you or in your presence. Don’t mention how their Instagram stories or Snapchat posts affect you. It’s not fair to ask anyone to censor themselves on social media, but it’s reasonable to expect a little restraint when you’re hanging out.

Brings Things Up Early

The sooner you talk about what’s bothering you, the better the conversation will go. For example, if your friend asks you to be in their wedding party and you’re on a limited budget, tell them about any potential issues as soon as they ask. If you wait until they’re already booking the bachelorette party and bridal shower, it may be too late for them to change anything.

If your college friends want to plan a reunion trip to Las Vegas and you’re still paying off credit card debt, tell them you can’t afford to go before they book an Airbnb with you in mind. Your friends will likely try to accommodate you if they can, but only if you give them plenty of notice.

When They Owe You Money

Lending a friend money can feel like an easy favor in the short-term, but plenty of friendships have ended over an unpaid debt. If your friend owes you money and hasn’t made any effort to pay you back, the only solution is to talk about it directly.

Don’t discuss this over text, where anything you say may appear passive-aggressive. Try to meet with them face-to-face or talk over the phone if you don’t live nearby.

Make it clear that you understand their situation and that you sympathize. If they can’t pay back the full amount right now, tell them that you’ll accept partial payments. Shame is the biggest reason why people avoid talking about money, so the goal is to make your friend feel comfortable enough to have a frank conversation about the debt.

When You Make More

If you’re the friend who earns more, navigate money conversations carefully. You never know what someone’s financial situation is really like, even if they’re sharing specific details with you. Avoid giving your friends money advice unless they ask for it – or maybe if they complain about a certain topic endlessly.

Don’t automatically assume your friend can’t afford to do something, but be respectful and understanding when they do opt out. You may be surprised at what they’re willing to splurge on – especially if the activity is something they value highly

Offer to do free or cheap activities if they seem hesitant to suggest alternatives. Even something simple like watching Netflix or cooking a meal together can be just as fun as a night out.