What to do when your friends are sending you broke

Friends and money don’t always mix. Here’s how friendships can impact your finances, and what to do when your bestie is bad for your bank balance.

Your friend is planning an outrageously luxe overseas trip.

Meanwhile, you are getting acquainted with baked beans on toast and they are wondering why you can’t come along.

Money can have a seismic impact on friendships, especially when there is a big disparity in your finances.

If maintaining your friendships is making less and less financial sense, it is time to arm yourself with a game plan to ensure you’re not leaving yourself in the red.

Friends and our spending habits

As social creatures, we just want to fit in. That can often mean trying to keep up with our friends, perhaps even when we really can’t or shouldn’t.

“Let’s face it, nobody wants to feel left out, ever,” accountant and Healthy Business Finances founder Stacey Price says.

“And especially with social media just showing everyone’s ‘highlight reel’, it is really easy to play ‘keeping up with the Joneses’ without even realising.”

We are all in different financial positions, but where friendships can become tricky is when we can’t be upfront and honest about what we can actually afford.

“Sometimes peer pressure could mean that people spend money they don’t have as they don’t wish to have the awkward money conversation,” Stacey says.

Ultimately, however, it is important to draw a line as the consequences could be dire.

“Setting financial boundaries allows us to be in charge of our money, to make it work for us,” Tribeca Financial CEO Ryan Watson says.

“The alternative is that we spend everything that we earn and get ourselves into significant personal debt, which is then very hard to extract ourselves out of.”

How to navigate the friendship money gap

If your friends earn more than you and have expensive tastes

“Get creative and think of ways you can still enjoy the same or similar experience but for less money,” Stacey says.

Think regional holidays instead of overseas trips, dinners at home instead of fancy restaurants, or breakfast catch-ups rather than cocktails at a swanky bar.

Ultimately, however, you might actually want to take part in some activities, but Ryan says to decide which of the experiences are of most value to you.

“Understand and ‘own’ that you can’t do them all, therefore prioritising the ones that you really want to do and spending the money on them,” he says.

“The additional upside to doing this is that the experiences that you do choose will mean a lot more to you, because of the ones you had to say no to.”

If you keep stretching yourself to keep up

“Stop. Plain and simple – friendships should not become ‘debtships’,” Stacey says.

It might be time to swallow your pride and be upfront about your financial situation; it is highly likely your friends may not even realise that you are spending beyond your means.

“If they are true friends, they will respect you for your vulnerability and honesty,” Ryan notes.

“Your ability to spend as much money as them will genuinely become a non-issue.

“Conversely, if they judge you based on this, it’s probably time to rethink who you value as friends.”

If your friends are enablers, helping you justify any purchase

Stacey says you can use this situation and flip it to your advantage.

“For those enabler friends, what I do is I use their skills but for good, not evil,” she says.

Stacey suggests telling them what you want to do or buy and enlisting their help to stay within the budget that you have in mind.

“Use their skills, but set your financial boundary with them clearly from the get-go,” she says.

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Written by Tania Gomez.