How to Handle Mixed-Income Friendships

Finally, as the country reopens, you’re likely seeing more of your friends. Out with the video chatting and in with the high-fiving, hugging and, well, spending.

For every dinner, there’s a check to pay; for every wedding, a gift to buy; and for every concert, a ticket to score.

You may notice that you and your reunited friends handle these kinds of expenses differently. Maybe one of you sees an $80 night out as chump change, while the other feels like a chump for desperately needing that cash for rent.

Here’s how to reenter the world of socializing and spending while keeping friendships and finances intact.

If you're the friend with less money

Reflect on your finances and priorities, as well as how they may have changed during the pandemic.

“This is an opportunity for everyone to be more mindful about where they want to spend their time, money and resources,” says Kathleen Burns Kingsbury, a Waitsfield, Vermont-based wealth psychology expert and host of the “Breaking Money Silence” podcast.

Consider what’s important to you, she says, as well as the experiences you want to invest in and those you’d rather skip to save money. “Then you can decline invitations a little easier because you feel more solid in your decision,” she says.

Say you realize that during quarantine you didn’t mind PB&J for most meals, but you craved live music. Skip the fancy dinner plans and, if your finances allow, buy the concert ticket.

Or make your own plans if you’re simply longing to catch up with friends. Host a potluck, movie night, bike ride or another more affordable hangout.

With this kind of intention, you’re empowering yourself to make strategic financial decisions. Doesn’t that sound better than bailing because money is tight?

As Kingsbury puts it: “Instead of saying, ‘I can’t, I can’t, I can’t,’ it’s more about saying, ‘This is what I’m going to do.’”

As you reflect on financial priorities, consider creating a budget to match them, says New York-based financial therapist Aja Evans.

A budget is a plan for your incoming and outgoing money — though you can call it something else if the B-word wigs you out. (Evans calls her family budget their “killing-it plan.”)

The key word is “plan.” No need to resort to a shrug or stress-fest when you’re invited to a destination wedding or pricey brunch. With a budget, you already have an idea of how much you can (or can’t) spend on those activities.

If you can’t swing the event, trust that your friends will understand. “I would imagine that, after COVID, people really understand financial stress no matter their level of income or assets,” Kingsbury says.

If you're the friend with more money

If you can afford the dinners and concerts, then live it up, Evans says. But try to understand that your friends can’t always join you.

Be “empathetic and compassionate and — here’s the hard part — not judgmental,” Kingsbury says.

You may not know your friend’s circumstances. Many people don’t share when they’re financially stressed, Kingsbury says, “because there’s that judgment and shame.” So give your friend the benefit of the doubt when she declines an invite.

And give your friend something else: time. As soon as you plan an outing or learn about a pricey event, tell them so they can try to plan for it, Evans says.

Even with that time, “be prepared that some people might not be able to make it work,” Evans says. Allow friends to opt out or even participate in an alternative plan.

So if you invite friends to a destination wedding, for example, explain that you know it’s an expensive request and understand if they can’t join. Maybe you and your friends who can’t make the trip go out to dinner locally to celebrate instead.

How to talk about money with friends

These spending situations become easier when you and your friends can talk openly about money. If your buddy already knows you’re saving for a down payment or supporting your parents, for example, she’s more likely to understand when you pass on a winery trip.

And if you discuss finances with friends, you may be able to motivate and help each other. Maybe your friend knows of a first-time homebuyer program that could help you with that down payment.

But, of course, money can be a loaded subject. To keep the conversation casual, avoid having it while you’re already out spending money, Evans says. (Or while you’re drinking.)

As for what to say, start with “I” statements, she says, as in “I’ve been looking at my finances and noticed ...” With this phrasing, your friend is less likely to feel defensive or pressured to share.

Or start with a more general, less personal chat. Share an article, Kingsbury says, or bring up the financial aspect of a news event or even celebrity gossip.

“Once people start to talk about money in general, then the conversation over time evolves,” she says. And friends “become more vulnerable and willing to share.”