Between the dog birthdays, the gender-reveal parties, and the can’t-stop-won’t-stop celebrations, we’re constantly being socially pressured to spend money. In fact, according to a survey by TD Ameritrade, 34% of millennials feel the need to spend because of our friends’ money habits. And yet, even though you might cringe a little when you get that bridesmaid request or the over-the-top weekending invitation, we can’t seem to say no. In fact, we’re socially conditioned to want to look good to our friends. And even in circumstances where our friends know the realities of our personal finances, they’re not always good at remembering that the YOLO lifestyle isn’t exactly budget-friendly.
In my day job as the founder of Zeta, an app that helps couples manage their finances, I spend countless hours talking to young couples who are managing money together. More often than not, I end up on coaching calls about debt — which they often accrue trying to be good friends. One of my clients, let’s call her Nieves*, described the following story to me: as a grad student with no income, she’d often get invited to catch-up dinners by friends with jobs. As her friends chatted over dinner, she’d silently stress about ordering the cheapest meal or limiting her drink intake, while her friends seemed not to care. When the bill arrived, those friends were quick to “split the bill” leaving her with a tab for food and drinks she couldn’t afford. “Quite honestly, I still look back at that time and cringe,” Nieves says. “It was incredibly embarrassing to be in that situation and I can still see the lack of empathy in their eyes. They couldn’t understand why I’d come to a dinner I couldn’t afford. I wanted to catch up, but I was also trying to keep my loans and expenses in check! It quickly became hard to do both.”
Invariably, this pressure to live a certain kind of lifestyle might be ruining our budgets. In fact, 46% of millennials have credit card debt, often racked up thanks to some of this pressure. If one member of a friend group has an all-out 30th birthday party, others then feel pressure to do the same. And sometimes, our present actions create obligations that our future selves might not be able to meet.
That’s what happened to Tina*, a chef in NYC. “A few years ago, when my first restaurant was opening, I was so incredibly excited and asked a bunch of my closest friends to fly in and stay at a hotel so they could celebrate with me. I was really proud of my milestone and wanted to have my loved-ones nearby! But the next time one of those friends wanted me to come celebrate a milestone with them, I felt trapped knowing I couldn’t afford to go, both in terms of time and money. I didn’t just feel like a shitty friend, I felt like I’d let her down because I couldn’t reciprocate.”
This tit-for-tat approach can ruin not only our finances but also our friendships. IMO, friends (especially the good ones) should not be the source of our money worries. And as friends to other friends who make less, we need to teach ourselves to be more conscious of requests we’re making of each other and/or be clear if we expect reciprocity.
Learning from these examples, and countless others, we can all practice a little more money empathy. So the next time you’re navigating a money conversation with a friend, try one of these tips to help you and have your friend be less stressed about money.
Plan for the lowest common denominator rather than the highest. Always plan for the person with the least amount of money rather than for the group average. Your actions will help more than you might realize. And if you want to do something that might be a financial stretch for some of your friends, find a way to include them so you don’t create a divide (eg. Offering to help pay for their portion).
Give without expectation. Know that sometimes the things one of us can afford isn’t necessarily what someone else can, no matter what the optics look like. Instead, try giving without expecting something in return, whether it’s a Christmas present or a wedding gift. And if you do have an expectation (because sometimes we do!) be clear about that — “I’m happy to do you this favor if it’s important to you, and I hope you’ll do the same one day.”
Know your boundaries. Stand up for yourself and be clear when you can or cannot afford something. Even a simple, “Can I raincheck this for when I’m a millionaire?” should work in smoothing over the awkwardness. Or in the case of Nieves, try being proactive and offer to cover your portion before anyone else has the chance to split things differently.
* names changed for privacy
Aditi is the founder and CEO of Zeta, where she’s on a mission to help couples master their money. She dreams of one day being the Indian Oprah and keeps her skills sharp on The Money Date, a podcast she co-hosts her husband where they interview couples about love and money.
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