How to discuss money with friends

5 May 2024

If you were an alien coming to earth to observe polite society in action, watching friends split a dinner bill equally, despite not everyone having consumed equally, and then watching them seem fine with it, would be incredibly confusing.

Sally drank water and skipped dessert, Michelle had two cocktails to start and a lobster main, Sarah and Shai shared an entrée, Ben secretly ate before he came and Neha cleverly kept her portion under $50 with the steak special and a glass of house red. Yet, when the waiter comes over with the bill and someone (probably Michelle) says, “Should we just split it?”, cue a chorus of: “Okay! Yes! Good idea! It’s easier that way!”       

All that pre-eating and meal-strategising and for what? We often don’t have the language for broaching conversations about our financial boundaries so we tend to avoid them. But both friendships and funds can be lost when we don’t speak openly about our circumstances. By sharing our struggles, successes, goals and priorities, not only do we come to feel closer to one another but our bank accounts benefit, too.        

Still, setting money boundaries with friends and then talking about them can be awkward and difficult. Here’s a few tips to get you started.

The last taboo

Among friends, money is the last unspeakable topic. One US study showed that 61 per cent of women would rather talk about the specific details of their own death than their finances. Since the pandemic, people have been getting more comfortable discussing money but prefer to keep it in the family rather than opening up to friends. 

But it’s important that we do get comfortable talking about financial differences. Perhaps you think you have less in your bank account than your friend but it turns out they’ve been feeling the same way. Now you have someone you can confide in about money who will understand where you’re coming from.

And like everything else in life, our financial circumstances aren’t static. You could go from being the lower earner to the higher, or vice versa, and you’ll want your friends with you on the journey, whichever way it goes.

Honesty is the best policy

“A famous study by the Federal Reserve Bank of Philadelphia found people are more likely to go bankrupt if their neighbours win the lottery,” says economic behaviourist and author of Mind Over Money, Evan Lucas. “They didn’t realise their neighbours had a windfall and they were trying to keep up.” That’s an extreme example but trying to keep pace with higher-earning friends is an expensive habit and studies show it can lead to debt.

Spend some time thinking about your financial boundaries and be honest about your limitations – with your friends and yourself. Maybe you’re willing to splurge on a holiday with them but that means you can’t (or don’t want to) spend big at the next dinner out. Instead of bailing, try offering some cheaper alternatives that are more inclusive of everyone.

How to bring up a money talk

Lucas says that ripping the Band-Aid off can be a good way to broach the money-and-boundaries conversation but don’t pick a time of heightened stress, like when the bill’s just arrived.

Instead, read the room and be prepared to throw your hat in the ring first. One approach is giving them a heads-up by asking for permission: “I’ve been thinking about my budget and I’m wondering how you factor in ‘X’. Can I ask you some questions?” Be willing to be vulnerable and a bit awkward. Lucas recommends “approaching the topic with genuine curiosity. Ask about their goals and what they need to do to reach them,” he says. Remember, you’re not asking them to share details of their bank accounts, just trying to open deeper conversations about money that will make it easier to talk about what you’re willing to spend it on.

If you’re not quite ready for these conversations with friends, warm up with the why/ lie/sigh method. Coined by financial counsellor Victoria Shakeshaft, it involves initially staying vague about why you can’t attend or contribute to something. If that fails, craft a white lie, like “I can’t make dinner as I’m up early tomorrow”. Still not getting through? The “sigh” part is when you resign yourself to saying it like it is.           

Watch Evan Lucas on The Brighter Side on Channel 10 and 10 Play on Saturdays at 6pm.

3 ways to handle friends and money

1. “Can you get it? I’ll pay you back.”

A simple, “Sorry, I can’t cover 5 VIP passes. Do you mind transferring me money first?” will do. Alternatively, only lend what you can afford to not get back and reframe it to yourself as a gift so you’re not resentful.

2. Splitting the bill

“Talk about it before dinner,” says Lucas. “Don’t feel bad about saying, ‘I can’t cover anyone else.’ There shouldn’t be any guilt in that. It’s financially responsible to have that boundary and say no.”

3. Choosing venues

Everyone loves to see money in the bank so if you’re wondering whether you should suggest some free or low-cost alternatives, go for it. Free events, coffee walks, potluck dinners, BYO eateries – get creative. 

Things you should know

An earlier version of this article was published in Brighter magazine

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