Ways To Handle Money Issues With Friends

If you want to remain friends forever, treat money issues sensitively. Remember Shakespeare in Hamlet? “Neither a borrower nor a lender be, for oft loan loses both itself and friend.” The following tips will help you know how to handle money issues with friends.

Having friends at different income levels can lead to awkward moments, as you need to continuously adjust yourself to fit in each other’s income levels. Say you want to have a meal out together, the rich one may choose a posh restaurant while the poor one can only afford some fast food joint. Or you may be co-workers and each time you go out for a drink together, the cost kills you.

You may also find it awkward to visit each other because of the different neighbourhoods you live in – one in Eastlands, the other in the more leafy suburbs of Nairobi. Even minor differences in income can lead to misunderstandings and hurt feelings among friends.

Though most financial interactions with friends are minor and limited to general discussions, there are two areas that you should pay special attention to if you wish to have your friendship remain intact. These are peer pressure and borrowing or lending money to each other.  Lets deal with Peer pressure

Peer pressure and money

Peer pressure is a real and powerful force, especially among the youth. If your friends value fashionable clothes, you too may start to value such kind of clothes. If your friends party everyday, you will most likely be found in their company. If they like showing off, you will most likely become a show off, too. It can be tough to make smart financial choices when everyone around you is spending – you feel pressured to spend too in order to belong.

That aside, it is possible to spend quality time with friends without going broke. The key is to recognize that peer pressure is mostly internal – it comes from a desire to fit in – and you have the power to control it. When you realise that you don’t have to spend to impress your friends, most of the pressure goes away. Here are some ways to cope with social spending situations:

Explain your goal

Let your friends know what your financial goals are. If you are repaying a loan or saving to buy something like land or a house, let them know these are the reasons you don’t have too much money to throw around. Be straightforward about your future plans, and ask them to help you make smart financial decisions. Once they understand your goals, they will most likely be supportive and not see you as a miser. You will be surprised that by being honest with your friends you could also be helping them reflect on making financial goals of their own. This is positive influence.

Talk about money

A lot of people think that talking about money among friends is taboo. But money is something we all deal with and it would help to talk about it so you can give and get help from the people around you. However, you shouldn’t pressurize your friends to talk about their finances if it makes them uncomfortable, but there is no shame in sharing your situation with others. Your friends might have some great financial advice and you may also have experiences they can learn from.

Suggest low or no cost-alternatives

When you want to spend time together, suggest low cost ideas where you will enjoy each other’s company and not poke holes in your pockets. You can go for walks to share those business ideas you have instead of going to the bar. You can plan for a picnic lunch instead of expensive meals in restaurants. You can invest in a board game or deck of cards and meet at each other’s house for cheap entertainment and good company. If you want to dine out, pick a restaurant you know you can afford.

Budget for social spending

Kenyan culture, where people buy drinks for each other in other in rounds, can be quite intimidating to those living on a tight budget. If your circle of friends makes a habit of specific activities, build it into your budget so it doesn’t catch you by surprise. If your coworkers, for example, go for happy hour once a week, set aside some money in your budget for this.

Leave your money at home

If you are worried that you will cave to peer pressure and spend, create a self-imposed limit. Take only what you want to spend when you go out with your friends and leave credit cards behind. If you don’t have the money with you, you can’t spend but you will still have a good time.

Limit yourself

Do things with friends, but just learn to spend less. Join your friends for a drink, for example, but only spend what you have budgeted for the evening. Have only the drink you have budgeted for, or buy the one round you have money for, but no more. If your friends want more rounds, let them – but you don’t have to feel pressured to join in.

Opt out

If your friends regularly do expensive things, politely bow out from time to time. By going out for drinks once a month instead of once a week, for example, you reduce your costs by 75 percent. If your friends like to go shopping, join them for companionship, but make it clear that you are there for the company, not the buying. If the temptation to spend will be too great, don’t go at all. If you can’t accompany them on a holiday they are suggesting, politely tell them you cannot join them.

Don’t keep score

Don’t obsess about what others do or don’t have – focus on the relationships, not material things. This can be tough, but it doesn’t do any good to ask yourself why you don’t live in a big house like your friend. Remember, life is not a competition. Your goal is not to keep up with the Joneses; it is to do what is best for you and your family.

The most important thing is to be honest with your friends, and with yourself. Don’t cave to peer pressure just to impress people. This can be tough if you are a people-pleaser, but it’s vital to your long-term happiness.