My friend Tim is in a rough spot. He recently got divorced, moved across the country, and started a new job. He's making less than he used to, but his expenses haven't declined much. I don't think he's gone into debt, but he's walking a fine line.
One problem is that he doesn't have as much disposable income as most of his friends do. Because they have more money, they want to do more things, and the things they want do do are more expensive. This puts Tim in a bind. He wants to hang out with his friends, but he doesn't want to overspend.
I've been in similar situations in the past. It can be difficult to make smart financial choices when everyone around you is spending. You spend, too, in order to belong. Here are seven ways to cope with social spending situations:
- Explain your goals. Let your family and friends know that you're trying to get out of debt or are saving to buy your first house. By making your goals explicit, you should decrease the amount of pressure they give you. (And the amount of pressure you give yourself.) Conversations about money don't have to be uncomfortable. By honestly sharing your struggles and goals, you encourage those around you to examine their own spending as well. Ask your friends to help you be good, rather than pressure you to do something you'll regret later.
- Suggest low- or no-cost alternatives. Bike or run together. Go hiking. Kick a soccer ball around. Organize a picnic or a mother-daughter tea party. Play hearts or bridge or Settlers of Catan. A one-time investment in a board game or a deck of cards can be a cost-effective source of entertainment. If your friends want to go to a movie, suggest a matinee. If they want to dine out, name a restaurant you know you can afford. (Better yet, suggest a potluck.)
- Budget for social spending. If your circle of friends makes a regular habit of a specific activity, consider building the expense into your budget so it won't catch you by surprise. If your girlfriends go out for happy hour on the first Thursday of every month, for example, set aside $20 for the occasion. This may, of course, require sacrifices to other parts of your budget.
- Leave your wallet (or purse) at home. If you're worried that you'll give into peer pressure, create a self-imposed limit. Take $5 or $10 or $20 with you, but leave your credit cards behind. If you don't have the money with you, you can't spend it.
- Limit yourself. Do things with your friends, but spend less. Portland has a great bookstore, and several times a year I shop there with out-of-town visitors. They have a tendency to buy a basket full of books. I used to do this, too, before I learned to limit myself. Now I buy one or two items from my want list.
- Opt out. If your friends regularly participate in expensive activities together, politely bow out from time-to-time. By playing poker only once a month instead of once a week, for example, you may reduce your costs by 75%. If your friends like to go shopping, join them for the companionship. If the temptation to spend will be too much, don't go at all.
- Don't keep score. Don't obsess about what others have or don't have. Don't focus on the stuff — focus on the relationships. This can be difficult, I know, but it does no good to ask yourself why you don't live in a fancy 4,000-square foot home on five acres. Life is not a competition. Your goal is not to keep up with the Joneses. Your goal is to do what's best for you.
If, on the other hand, you're financially well-off, be aware that your friends may not be in a similar position. Don't suggest expensive activities. Don't brag about money. Don't flaunt it. Respect other people's limits.
For more on this subject, check out the following articles:
- The New York Times: Money changes everything
- New York Magazine: What's a little money between friends?
- The Simple Dollar: Are your friends always spending money? Ten frugal activities (and advice on how to suggest them)
Whatever your financial situation, remember that each of us comes from different circumstances. Don't judge other people or yourself based on what they do and do not buy. Make smart financial choices for yourself, and gently encourage your friends to do the same.
Author: J.D. Roth
In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.
Good article –
Just a few thoughts –
Folks who struggle w/ money management usually also struggle w/ creating boundaries. In every relationship, we must have the right to say – NO – and feel secure enough that our friends / relatives will still care for us. If you can’t tell your ‘friends’ – Dudes, I’m broke – then they’re really not your friends.
NCN
I’ve run into this many years of my life. I have freinds run off the Europe and ask me why I’m not going and I’ve had to opt out, saying I was too poor. But mostly I was lying, I could have made the trip, but I decided to put the money in investments and other places, like education. There are times when I’ve been too poor too. I’m used to saying no. If saying no makes you a social pariah with your freinds I’d say you need to find new freinds.
I’m glad i’ve never had an issue with friends and money. I agree with the above commenters, i know my friends would support me if i wanted to spend less on something, even if they would happily spend tons on it.
The “Leave your wallet (or purse) at home” is definitely a good one – although you have to be careful to say “No thanks” to costs when you’ve run out of that money, rather than “No i can’t, i’ve run out of money” because well-meaning friends may offer to loan you the money. That creates more temptation, and a whole other world of problems with friends/loans.
And by the way, what’s a “potluck”?
A potluck is a dinner party where everyone brings a dish to pass.
Potluck: a party or gathering for which each guest brings food. My friends and I do this for parties a lot.
Budgeting for social expenses is really important because it makes you look at them. I have a friend who will want to meet in a coffeeshop once a week or so– four dollars until it warms up enough to meet in a further-away shop. There’s pre-seminar coffee, four dollars. There’s lab lunch, ten dollars. Twenty dollars a week goes to food with friends at the bare minimum.
Settlers of Catan, excellent choice!
I’m dealing with this issue from the other side: I’m the one encouraging my friends to spend. After a couple of years of getting my financial house in order, I’m ready to start doing some of the things I had to give up. While I want as many of my friends to join me as can, I also want them to do it responsibly.
To accomplish this, two of us sat down at the beginning of the year and planned out the things we wanted to do. We made a rough calendar and estimated as best we could what the cost would be. We then sent out all the invitations at once so that our friends could pick and choose as their preferences and wallets saw fit.
Some things, like a cabin weekend in July, will likely cost less than a hundred dollars per person. Other things, like a ski trip in February 2009, could easily cost over a thousand dollars apiece. By planning ahead, we’ve given everyone the power to pick what they want and set aside smaller amounts of money over a longer period of time. I hope this lets us all enjoy some special events this year, both while we’re away and after we return home.
I like the advice in #4 – DO leave home without it! I had to take this approach a year ago to save my finances from myself – I was my own worst enemy in charging things I should have been paying for with cash, or waiting until I could afford.
Have self confidence in yourself, maintain your budget, so many things to do that don’t require a lot of money. Pick and choose wisely.
Leaving your wallet at home is an excellent suggestion. That is how I broke myself of the eating out at lunch habit at work.
I like it, except the leaving at wallet at home part…I don’t think its ever a *great* idea to leave home without an emergency plan. You never know what could happen…I know, freak accidents are rare, but Id rather be prepared. Anyway overall, love it.
I think the birthday dinner is the worst culprit – the last one I attended cost about $50 for me alone! I have just accepted these occasions as the cost of having friends, and I would certainly rather have friends and waste some money now and again rather than the alternative.
Thanks for the definition of Potluck guys! :D
Dave, another idea is to subsidize your friends sometimes. Have them pay what they can afford and you pay the rest. I was once subsidized by someone richer than I who wanted me to come to a concert with him. And I once subsidized someone poorer than I was so he could be my partner at a ballroom dance competition and workshop. I also subsidize family members for once-in-a-lifetime family activities.
Occasionally, you just know one of your ideas would be perfect for someone who can’t afford it, so that’s when it’s a good idea to try this out. It can be a little creepy, but it can also work out very wonderfully.
If you have friends in different financial circles and you can no longer afford the higher expense outings, then try joining in on the ones you think are within your reasonable budget. If I was strapped for money, I would just join in on events that revolved around staying at home (Wii night etc), which tend to be substantially cheaper than going out to expensive restaurants and other places.
-Raymond
Potlucks are great! Games ie. scattergories, cranium can also be a lot of fun.
I have had to lose friends because they spend way more than I can afford. We are all in a similar income range, but no one else has children (DINKS). They expect we can leave the kids with someone and go out. We can’t. That just gives us the opportunity to find friends that have kids/accept our way of life.
This is very timely, J.D.! A friend is visiting me at the end of March, someone with whom I used to go shopping (which explains much of my CC debt). She makes about twice as much money as I do, so $150 on a pair of sandals wasn’t unusual for her. I’m already getting anxious about the possibility that I’ll “fall off the wagon” and pull out the credit card at the first sale sign we see. . .
Since I’m in debt repayment mode, I’m trying to think of things we can do that don’t involve Nordstrom, Macy’s and Banana Republic. Powell’s Books is a great idea, as is a matinee or a hike in Forest Park. All inexpensive or free! Now I just have to convince her that these activities are just as riveting as trying on shoes at Saks.
My friends and I play board games all the time. I think we realized at one point we can cook better food than we can afford to buy at restaurants and boardgames are a much better form of entertainment than a trip to a movie. We play Carcassonne instead of Settlers since it is easier to introduce new players too.
@FinallyFrugal
I think J.D. mentioned Powell’s as an easy place to spend money. Although, it is a lot cheaper than banana republic.
BTW, I live on Colorado, and I love Powells. We go there every time we visit Portland. I have one of their sweatshirts too, it’s my favorite.
@Debbie
That’s a great idea, though you’re right that it can be awkward. Of course, if you’re the organizer, you can always subsidize someone anonymously. This came up recently regarding a beach trip I’m taking this summer with a group of college students.
I’m a board game junkie; have been all my life. Many games can be expensive up front, but often pay for themselves over time. Now, in college, we got countless hours of enjoyment out of a deck of playing cards and a copy of Hoyle’s Rules of Games. That was just before the explosion of the internet, and much of that information is now available freely online.
I have different friends based on different life eras and interests. If our friendship is about a common interest and activity, then money often isn’t that much of an issue. If it’s based on life eras, then money CAN be an issue, because most of us are scattered across the country, and meeting up costs $$$.
Some friends have money and some don’t. If our friends with money want to treat us or host us, we go along to an extent, and accept graciously, because otherwise, we would not participate in the situation — we’re too frugal. We are generous when we can afford to be. Other friends/relatives don’t have money, and we either spring for the activity (hockey tickets, dinner) or choose something very inexpensive to do with them. Sometimes they reciprocate with babysitting or inviting us to eat with them.
As I told my student brother, when he said something about having more money contribute to birthday gifts, dinners, etc — it’s not about money, it’s about spending time with you. Either you feel that way about people or you don’t. I’m just not that interested in spending time with people who impress or want to be impressed.
Compared to some of these people, our lives are in line with our values and goals, and we don’t compete for who has the most stuff or money. We’re trying to have the most time! It sounds like some of the people in the articles who have the most problems haven’t decided what they really want in their lives and resent people who have what they think they want, because they are comparing themselves. To an extent, I think many people have the capacity to be rather wealthy, but can’t/won’t do what’s necessary to get there. (Ex. I don’t like to ponder how much money DH and I would have if we were both working full-bore on our careers and hadn’t had kids. We made some “damaging” choices there, if being rich is our goal!)
There are two sides to this. As one who has a circle of friends less affluent than I am, I often balance treating them to things (which would not be a significant budget item for me – like a simple lunch or coffee) vs. their comfort. With financial peers, treating one another to things is fun and nurturing. But if you’re not peers, the lower income person can perceive it as patronizing.
Case in point – I went with a group of friends to DC for fun and to do some Global Warming lobbying. I suggested we stay in an Embassy Suites – and split it four ways. (about $50 a piece.) I also offered to treat them. They vetoed it and instead suggested we stay in a Friends Youth Hostel. It was fun, but I must say sharing a big room with 6 women and one bathroom was not my first choice. However, it only cost about $29 a person!
so bottom line, if you’re the less affluent, is to be straightforward. If the higher income friend offers to treat you, don’t take it as insulting. Take it as a nice thing. If he/she doesn’t offer, and goes with your lower priced entertainment, that’s fine too. Friends have to be open with one another to cut across class lines. This makes some people so uncomfortable that they primarily socialize with people like themselves.
I just got back from a weekend visiting with friends and family. It is tough to balance the need to maintain close relationships, the desire to let loose and have some fun, and the realities of a budget. I find that more times than not we blow the budget by a good margin on these types of trips. I’d say we spent about $200 more than we should have. Most of that was on birthday gifts (we celebrated for three people in one trip) and more on food and gas. We make our “ideal” budget and then we fall short. However, the difference between paying down $600 in cc debt a month instead of $800 hurts our plan but it is still an improvement to growing the debt like we did before. It is so essential to our lives that it is worth it. I think everyone needs to first live below their means, and save or reduce debt aggressively. If you can make progress AND have fun that is seeking balance. I don’t care if I spend $50 on a nice dinner that wasn’t in the budget if I am still below my means and moving forward financially in spite of my lapses.
It can be so very awkward from the other end. It’s not particularly easy to have honest conversations about expenses with your friends (so that you can tell what would be problematic and what wouldn’t), and while it’s easy to tell your kid brother in school that you’ll treat him to dinner, grown adults with jobs aren’t always as open to that (understandably). Also…if you have limited free time, you find yourself having to choose between the cool thing you’d treat yourself with and more mundane stuff you can do with your friends. Of course you want to spend time with your friends, but when you only have one night a week to go out and you’d really like to try the new expensive sushi place, it can be hard to stick to the diner.
Sarah: Kid brother in my case = 37 yo working on his PhD and 34-yo BIL working on AA. Both have working spouses, and they all like to think they’re “grownups”, too. We’re the “well-off” sibs, and we only treat for things we really love ourselves and want to share with them. We make it clear that it’s about having a good time together — not us taking care of them because they can’t take care of themselves.
I’m not comfortable talking about money with friends but I agree with #1. Just like you might let friends know that you are on a diet/exercise program so that they don’t tempt you with chocolate at 3 p.m. I found it helpful to let my friends know I was working a Total Money Makeover. But, I also agree that having a fun/friends budget is important too! you don’t want to miss seeing or spending time with friends because the budget doesn’t allow it.
If you’re the poorer one in the equation and people *want* to treat you sometimes, don’t take it as an insult. It took a while before somebody pointed out to me that if the choices were not having me at an occasion or them paying for me to attend that they’d prefer to pay before I realised that it can be worth it for a more afluent friend! I’ve generally been “the poor one” in all the equations because I’m disabled and unable to work, and receiving things graciously is one life lesson that I think people need to work on. Another thing that helps me is the “pay it forward” idea – often if I’m given something the giver says “when you’re in a financial position, do the same favour for somebody else”. Realistically, I probably won’t ever be comfortably off financially but the idea makes it feel less … less icky, I guess.
This is just one idea. I also wholeheartedly agree with the idea of hanging around with people who share financial goals of saving and being responsible and of doing stuff at home – I adore board games and card games and potlock dinners! But they’ve already been mentioned a lot and the idea that people paying for things isn’t necessarily all about the receiver is an important one I think.
Ricky
If you’re the poorer one in the equation and people *want* to treat you sometimes, don’t take it as an insult. It took a while before somebody pointed out to me that if the choices were not having me at an occasion or them paying for me to attend that they’d prefer to pay before I realised that it can be worth it for a more afluent friend! I’ve generally been “the poor one” in all the equations because I’m disabled and unable to work, and receiving things graciously is one life lesson that I think people need to work on. Another thing that helps me is the “pay it forward” idea – often if I’m given something the giver says “when you’re in a financial position, do the same favour for somebody else”. Realistically, I probably won’t ever be comfortably off financially but the idea makes it feel less … less icky, I guess.
This is just one idea. I also wholeheartedly agree with the idea of hanging around with people who share financial goals of saving and being responsible and of doing stuff at home – I adore board games and card games and potlock dinners! But they’ve already been mentioned a lot and the idea that people paying for things isn’t necessarily all about the receiver is an important one I think.
Ricky
If you’re the poorer one in the equation and people *want* to treat you sometimes, don’t take it as an insult. It took a while before somebody pointed out to me that if the choices were not having me at an occasion or them paying for me to attend that they’d prefer to pay before I realised that it can be worth it for a more afluent friend! I’ve generally been “the poor one” in all the equations because I’m disabled and unable to work, and receiving things graciously is one life lesson that I think people need to work on. Another thing that helps me is the “pay it forward” idea – often if I’m given something the giver says “when you’re in a financial position, do the same favour for somebody else”. Realistically, I probably won’t ever be comfortably off financially but the idea makes it feel less … less icky, I guess.
This is just one idea. I also wholeheartedly agree with the idea of hanging around with people who share financial goals of saving and being responsible and of doing stuff at home – I adore board games and card games and potlock dinners! But they’ve already been mentioned a lot and the idea that people paying for things isn’t necessarily all about the receiver is an important one I think.
Ricky
I recently ran into this dilemma with my 18 yr old son, he lost his job (his Fault) and wanted to hang out with his friends and do stuff. They have jobs, and money, My advice to him was First you need to get a job and keep it, second is to get insurance,because medical bills can wipe you out for a long time ( he has a medical condition) #3 you need to live below what you make, If your friends cannot or will not accept this, then those kind of friends you don’t need. I work 2 jobs, 44 hours at first 30 at second per week, i would hope that he would take after me and work hard, but lately all he wants is a handout,This is where I get lost in what to do, I have never ask my parents for their money.He said his friends get money from thier parents,”so whats the big deal mom”?
perhaps I should ask if one of his friends parents would like to adopt him? His friends know he doesn’t have a job, they don’t help!
I tell him to just tell them no, whats with this younger generation with saying no? and getting off your butt and just getting things done? I know its not all young people, but I sure do see alot of under 25 year olds going for broke!
@Laura: I hear you! Birthday dinners are real budget-busters.
I think the first few posters were a little harsh. Not all of my friends know exactly how much debt I’m trying to pay off, even though they know in a general sense. But when you’ve been the “fun” friend for years–the one who was always willing to put the concert tickets on your credit card, willing to finance a road trip at a moment’s notice, etc.–it’s hard for your friends to change their perception of you overnight. I think my friends are getting a little more used to hearing “I’m sorry, but I can’t” more often, but I think it can be hard on both sides. Friendships are being redefined in a sense. Any friendship that experiences life-changing events (marriage, kids, etc.) either has to adapt or it fades away.
I have a friend whose fiance just left him, and he “needs to get out of this town” every other weekend. He’s in a less stable financial
situation than me, and he’s the one who always wants to spend like there’s no tomorrow. (hmm, see a trend?) He makes less than 30k per year, and wants to go to 4oo dollar a night hotels and theme parks on a regular basis, as well as rent a luxury vehicle to drive up in so he can make a big impression. I’d rather forgo the hotel altogether, and our cars work just fine.
( it’s not necessary, we live 2 hours from the farthest theme park, and have yearly passes). I can’t seem to make him understand that if he keeps spending like this he’ll never get anywhere. He’s 29 years old, and his parents are still there to bail him out. They gave him a house, a car, and charge him 400 dollars a month for the mortgage (he’s about 8 months behind on that, and I’m sure their mortgage is about 800 per month. not to mention taxes and insurance.) I feel bad for him, but I’m just about out of patience for the financial irresponsibility.
Make this short.
I have lots of CC debt
S.O. (not married) has none.
Wants to do things and offers to help me out (paying for me).
I feel bad not paying for my share of things.
I have the money for the things, but I could be using that to lower my debt instead.
I’ve been in this situation TOO many times in the past..and my friends dont get it. I’m a scrooge and I am happy. I’ve turned down trips to Vegas, stopped binge drinking, and just don’t buy ticket items. I’ve decreased my debt to only a student loan. Instead of increasing debt…pay down your debt and stay at home. But dont sell yourself short, do try to spend time with friends…and u dont have to spend money to do it :O)
Number four is a great idea … but a bit risky. There may be a situation that arises that requires spending a substantial amount of money, or at least more than 5, 10, or 20 dollars.
@ Sara
You may want to remind your adult son that he is getting money from you already. He uses your electricty, eats your food, and sleeps in the shelter you heat, all of which *you* pay for. While you are providing that for him right now because you love him, he is welcome to seek it elsewhere at any time. The Army, Navy, Air Force, and Marine Corps may be willing to accept him (depending on the medical condition you mention) and they will also pay him.
If he wants his own money, then he needs to go and earn his own money. You haven’t abandoned him since after all, he isn’t on the street starving.
Essentially, you need to look him in the eye and ask him what he’s doing for you. What, as a “Man”, is he bringing to the table to help *you* out? What is he doing that is providing value to the family? Remember, you owe him nothing. You provided him with life and are continuing to provide him with more than many people in this world have, a warm bed and full belly. He is an adult now and you are his “mother”, not his “mommy”. He needs to realize he should be buying his own lollipops.