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Money can be a source of disharmony in a romantic relationship and is among the top causes of marriage breakup, right up there with infidelity.
It can cause rifts in platonic relationships, too.
“Money is commonly a source of conflict in friendships where there is jealousy, unmet expectations or broken promises,” says Jean Paul Nyereka, vice president of client success at Money Wise Workplaces, which provides financial wellness services for employees.
When it comes to money, there isn’t just one way to earn it, spend it or save it. We handle our finances differently, depending on our upbringing, our personality type and life circumstances.
But there’s one thing almost all of us do have in common: We aren’t super comfortable talking to each other about money.
Still, discussing personal finance among friends is possible—and it’s worth doing. It can avoid hurt feelings and conflicts, which may be amplified these days as inflation has stretched our budgets. What’s more, your friends’ financial wins and missteps can serve as valuable lessons.
So how do you talk money with friends in a healthy way? Here are some tips.
Notice how you’re feeling
A change in your or a friend’s financial status can stir up all sorts of emotions, with jealousy being a big one. “A friend being promoted at work, getting a large inheritance or being successful in business can cause tension between friend groups as the other individuals envy their friend’s success,” says Nyereka.
An important step here is being aware of your feelings and letting yourself feel them. They’re valid, and being aware of them will help facilitate healthier conversations and stronger friendships.
Also, it’s important to remember that we naturally love to compare things to each other, but keeping track of whether you are “ahead” or “behind” your friends as far as finances isn’t conducive to a healthy relationship.
Ease into it
Looking to just get a conversation started? A healthy way to talk about money with friends is to open with a non-invasive, not-too-personal question. So instead of, “How much money do you have saved up for retirement?” you could ask, “What are your thoughts on TSFAs versus RRSPs for retirement saving?” You could turn to your friends for budgeting tips, but getting them to say the how much they are able to save a month is trickier.
Unmet expectations, spoken or not, are a common source of money conflict among friends, according to Nyereka. For example, an unspoken expectation could be the assumption that the more well-off friend pays for lunch or lends money if asked. Although it may be difficult to proactively raise these topics with a pal, think twice before making such assumptions. When in doubt, ask questions and communicate clearly.
Watch your words
A good friend cares about how their words and actions make others feel. If you’re the friend with money, think about how your less affluent friends will feel when you complain about the food on your first-class flight or moan that your designer shoes aren’t comfortable.
Suggest inexpensive activities
When friends are in different financial strata, going out can become a bit of a minefield. A fun weekend away for one of you—hotels, dinners, activities, transportation — might be unattainable for the other. If you’re the friend with the bigger bank account, make sure to suggest some cheap and cheerful nights out sometimes.
Keep your promises
“Broken promises relating to money can affect friendships and relationships,” says Nyereka. “This comes in many forms, such as savings goals set jointly but not met by one party, or a short-term loan that was supposed to be repaid but was not.” If you can’t hold up your end of an agreement, whether formal or informal, be upfront and realistic.
Let your friends be there for you
Feeling unable to meet your day-to-day expenses is stressful and being alone with those worries can be damaging. “Being able to talk openly with a friend about this stress can result in a deeper friendship and possibly amplified resources to help,” says Nyereka.
Filter your friends
Money can break up relationships—and that’s not always a bad thing. If you have friends who are routinely inconsiderate of your finances, or who make you feel bad about your money situation through their words or actions, then it might be time to start hanging out with different people.
Dishonesty about your finances can seriously undermine trust and cause betrayal and hurt in a relationship. Even just among friends, being inauthentic or disingenuous about your income with friends can chip away at trust. That doesn’t mean you have to share all the details of your finances to your circle of friends, but don’t mislead, either.
Know your worth
Our friends and family love and want to spend time with you because of who you are, not because of or in spite of the figures in your accounts. Go into every interaction with your friends confident in this knowledge, feeling secure in their affection for who you are, not what you have.
What if, despite your best efforts, money is causing conflicts in your life? It’s important to take steps to address it. This might include seeking the help of a financial advisor or therapist, setting clear financial goals and boundaries for yourself, or having open and honest conversations with friends or loved ones about your financial situation and needs, says Nyereka.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.