Don't Let the Group Chat Make You Broke — How To Talk Money With Friends
Friendship is one of the great gifts of life. But between peer pressure, “keeping up with the Joneses” and simply wanting to enjoy time with your friends, it can prove costly.
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“Wanna go out to dinner?” “Let’s get out of town for the weekend.” “That new artist is coming to town!” “Let’s have just one drink.” “We can split the house six ways, it will save us all money.”
Those are just some of the phrases that you might be all too familiar with. Unfortunately, many of them can wreck your budget.
If your default answer to everything your friends ask you to do is “yes,” you might not just succumb to “lifestyle creep.” You might actually have a full-blown financial emergency on your hands.
That’s why it’s important to talk about money with your friends, even if it feels a bit uncomfortable. If your friends understand what you’re trying to accomplish with your finances, you can stop pretending everything is fine while your credit card balance keeps climbing.
Start With Your Own Limits
The first step in protecting your own solvency is to understand what you can actually afford. Take a hard look at your actual income, bills, debt payments, savings goals and regular expenses. Only after you’ve covered every one of your “needs” can you start determining how much you can really afford to spend with your friends.
This is also a good time to come to grips with the fact that you probably shouldn’t say “yes” to everything you’re invited to do. No one wants to be the one saying “this restaurant is too expensive,” or “I can’t keep going out with you.”
But the truth is that everyone has their own financial limits and they’re rarely the same. Even within a peer group, people tend to have ups and downs, surprise expenses and hidden windfalls. Some may live at home and not have to pay rent, while others may receive financial help from relatives.
If you’re living paycheck to paycheck and struggling to get by, you’ll dig yourself a big financial hole if you try to keep up with someone who doesn’t have to pay for rent and food.
That’s why it’s so important to come up with a number that works for you on your own. Then every month you’ll know just how much money you can afford to spend with your friends.
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Factor In All Expenses
Trips with groups of friends can seem more affordable on the surface, because everyone is splitting the expenses. But before you commit to a big weekend, be sure you understand the total cost. A weekend condo bill of $900 might not seem like that much after it’s divided six ways, but that doesn’t take into account dining out, transportation and entertainment expenses. That $150 you initially think you are spending might more than double once all costs are included, so be diligent in your accounting.
Use Normal Language, Not Financial Confessions
You don’t have to bring your bank statements with you when you go out with friends. But you can quietly deflect the unaffordable parts of an adventure with your friends while still remaining part of the group.
For example, if one of your friends invites you out to a fancy dinner, you can say something like, “I’m trying to keep this weekend low-cost, but I’m in for coffee or a walk.” Or perhaps you can be even more direct, if you’re comfortable, saying something like, “That place is a little much for me right now. Could we do something more casual?”
These methods work because they’re honest and up-front without being awkward. Your friends likely want your presence more than your money and they may not understand your limits unless you tell them.
The Bottom Line
Life shouldn’t just be about bills and responsibility. Everyone deserves some level of rest, friendship and celebration in their lives. But don’t let “I deserve it” turn into permission to spend without any accountability. Ask yourself if you can enjoy an activity without it creating financial stress for your future. If the answer is yes, that’s your green light to go ahead. But if you’re spending money that you really don’t have, it’s time to have a conversation with your friends before your lifestyle exceeds your income on a permanent basis.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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