Dear Deborah: A Monthly Financial Advice Column

In this installment of Dear Deborah, we delve into the murky waters of money and friendship.

We could fill libraries exploring the different issues that may arise from mixing money and friendship. With the holidays looming, it’s often challenging to keep our friendships strong while navigating the choppy waters of personal finance. Here are a few questions from our readers on how to move forward through tricky money questions.

Friends HipLatina Money

Money & Friends HipLatina

Q:  My childhood BFF is an accomplished musician trying hard to get “discovered” while working a low-paying job in the hospitality industry. While I respect her fortitude, she’s often broke and struggles to make ends meet. My career has blossomed and recently I was promoted. This has caused a strain on our relationship since I feel I cannot invite her to come along when our other friends go out. The worst part is that many of us are planning to go away for the holidays and she cannot afford the trip. It might hurt her feelings to be excluded, but I already know what her answer will be. Should I offer to pay for her or keep the trip a secret? How can we stay friends as our career paths and financial conditions continue to take separate paths?

A: In order to answer this, it’s helpful to examine both sides of the situation—yours and your friend’s. Spending time with friends that have money challenges can itself be challenging.

First determine the value of your relationship. Is this person worth keeping around? Take a moment to review the friendship, considering the positive things this friend brings to your life. Consider your shared history, the contributions, the hidden gifts, and the value of the time you spend together can help guide you to find more treasured moments together.

The next thing to do is realize that change is inevitable. All friendships ebb and flow. And one thing is for sure, fortunes can shift. For most of my career I earned a good salary, more than most of my friends, until economic conditions shifted and I lost my job for the first time ever. I found myself on the other side, struggling to make ends meet. The experience was both eye opening and humbling.  

For years, my best girlfriends and I had escaped the rigors of being working moms by meeting for dinner at a nice restaurant, having a spa day complete with massage and pedicures, or going shopping. Often I would pick up the check, treat the other to some pampering, or buy a trinket she had her eye on. But, when I found myself on the other side, unemployed and fearful about where my next dollar was coming from, a friend paid my way and I initially felt shame, not gratitude. I had to talk myself into feeling worthy of receiving her gift. This was an unexpected realization that my previous behavior may have come across as condescending or embarrassing. You won’t know exactly how your musician friend feels about these issues unless you speak with her about it.

Be honest. Money is a sensitive subject. We tend to confide in our friends about our most intimate problems, our private health issues, and even sex, but when it comes to money, we struggle. Face the truth head-on and ask probing questions, then sit back and listen. Everyone has a story. You might find your friend is relieved to be able to share their concerns. While awkward at first, many folks are grateful to have broken down the communication barrier and find their friendships become stronger.

Emotions lie underneath most money inequities. Strong feelings such as jealousy, shame, guilt, resentment, and fear can wear away the foundations of any relationship. Acknowledge your friend might feel inferior to you, unworthy of your generosity, or not good enough when compared to your financial successes. So, how do we counteract these sensitive emotions? By invoking compassion, empathy, respect, and fairness can actually help us see into the darker parts of those we love.

Recognize the Friction. It’s the elephant in the room, the unacknowledged and unsaid that feeds resentment. Get it out in the open. Does this friendship drag you down? If you are trying to improve yourself and your situation, good friends don’t get in the way; they encourage instead of undermine. Healthy relationships support our growth. Sabotage, whether hidden or more obvious, is rooted in jealousy and should be addressed with kindness and not ignored.

Q:  This has been a good year for my company and I’ve been told we are getting a nice year-end bonus. I was so excited I told my friend the good news. Yesterday, she called to ask for a loan. We’ve been here before a few years ago and she never paid me back. When I brought this up, she said she’s grown up and promises things will be different now. I’m not so sure. What should I do?

A: How to handle a request for a “friendly” loan is always tricky. There’s an old saying that you should never lend money you can’t afford to lose. If you decide to become your friend’s loan officer, make it a business arrangement with a written agreement that includes details such as how the loan will be repaid, and don’t forget to charge interest, which protects both of you. Sit back and think about worst case scenarios—late payments and defaults. Don’t give loans on a handshake if you want to remain friends. Last but certainly not least, don’t micromanage your friend once you’ve finalized the agreement. Trying to control how the money is spent is a sure way to feed resentment and trash a good relationship.

Q: My friends and I love to try new restaurants and vacation spots. Most of the time, it’s no problem, but we have a couple of friends who promise to settle up only to find we have to chase them down to get paid back. They always say it’s just accidental—it slipped their minds. Meanwhile, we’re out hundreds of dollars for months. How should group expenses like a trip be handled where you are sharing a hotel room? Should each person pay for one of the big expenses initially, or should the person who is going to put the bill on their card collect everyone else’s money first?

A: We’ve all heard the promise, “I’ll write you a check on payday,” when the bill comes. Make it easy on yourself and keep it simple. Before you swipe your card, settle up on the details first. What can you do to make financials transactions between friends go more smoothly? Try utilizing simple mobile apps to split expenses on the spot, taking the pressure off right away. Venmo works, or Paypal, and both allow your friends to pay you on the spot. How you decide to pay the group expense and collect the money is up to you. Just make it clear to everyone about exact charges and fees up front. Don’t forget to agree on how to handle those additional charges that often follow a vacation, such as room service fees and in-room movies.

Know when to put the credit card away. Some friends are notoriously bad at returning payments, and for these people, it might be best to socialize outside the bounds of money. Plan a money-free date with your friend focused on nurturing the relationship. This can be as simple as playing a game by the fire together with a cup of tea, taking a long walk in nature, or trying new recipes together. One friend of mine hosted Sunday afternoon “cupboard potlucks”—combining items from their collective cupboards, sometimes forgotten in the back, to make a potluck supper. By establishing thrifty constraints, they invented some fun dishes and challenged themselves to be more creative.

Have you had an awkward or enlightening experience with friends involving money you’d like to share?

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