Money and Friendships: Accepting Your Friends’ Money Habits

We’re not sure everyone would admit it, but money affects our friendships. And we’re not just talking about money you loan to a friend. Your approach to money affects your relationships. Whether you know it or not. Is money getting in the way of better friendships for you?

Every person has a unique approach to money. We call this your Money Personality. You have a primary approach and a secondary and both affect how you view decisions involving money. Your Money Personalities affect how willing you might be to: cover the dinner bill, bring a coupon to lunch, buy the more expensive gift that will last longer, loan money for a pal’s startup, or whether you really don’t care about money at all.

Examples of How Friends’ Money Habits can Cause Tension

For example, Taylor has a friend that some people would call “cheap.” But we know he’s a primary Saver and secondary Security Seeker. A group of guys were having lunch recently and our friend negotiated a lower price on a menu item since he was removing something from the dish as it was listed.

That was totally a foreign concept to us. It would have never crossed our minds to ask to pay less to modify a dish to better suit our needs. We are 100% not judging him, we see what he was thinking, but that is just different than how we think.

Not wrong. Just different.

Honestly, a wall was starting to build up a bit when that particular friend would ask to grab lunch. Taylor would get embarrassed even though it wasn’t his deal. Taylor worked food service for over a decade, so he felt like it put him in a weird spot and we noticed he was distancing himself from this particular friend.

One time he brought his coffee into a restaurant because he “had it from earlier” and didn’t want to purchase another drink at the restaurant.

So what do you do when you have a friend who has different spending habits than you? How do you guard against that friendship ending just because you have different views on money?

We think friendships are worth more than a couple of bucks here and there.

But a Bank of America study found more than half of consumers have seen friendships end over money. 43% would be willing to end a friendship if you haven’t paid that friend back. 38% said they would consider ending a friendship over less than $100 not repaid.

Unfortunately, the study also found 71% of people have loaned friends money and never been paid back.

Money differences strain relationships. They probably don’t realize the impact they have on your friendship. They are doing what feels natural, but their “natural” isn’t yours.

We ALL need to be aware of how our Money Personalities impact others. Money affects our friendships.

Here are a few ways to help your friendship avoid the crash and burn of hard feelings and neglect.

1. Use technology.

There are multiple ways to pay someone these days even if your wallet is in your other pair of pants. There are several free mobile payment apps that are great investments to settle up with friends (or your kids) right away.

Apps like the popular, Venmo, make paying someone easy. Venmo has 22.9 million users. The app processed $17.6 billion in mobile payments in 2016 up 135% from the previous year. Venmo lets users withdraw and receive money from any bank free of fees. Of millennials using a mobile payment app, 68% use Venmo.

Using the chat-like feature on Venmo, you can remind your bar buddies that they need to settle up the next day with a smiling emoji next to one of the beer glasses clinking. That’s easier than a phone call.

2. Know before you go.

Know your close friends’ Money Personalities. Decipher their approach to money to lessen surprises.

Once you know the thought process behind your friend’s behavior, it is easier to anticipate what they’ll do and be less annoyed by it. If you know they mean well and just approach money differently than you, it is easier to be patient with them like Taylor is now with his BYOC (bring your own coffee) friend. It’s not worth money getting in the way of better friendships.

3. Set boundaries.

Think through your response to pitching in or funding a loan before you’re faced with the question and your friend’s puppy-dog eyes.

If you are married, make sure your spouse agrees to any loan you plan to offer a friend. If a friend asks to borrow money, tell them you need to consult your spouse first. And then do that. We would never lend money to someone without telling each other about it and us agreeing on it. It seems like there is always that one person who wants to put pressure on you. They see you’re doing well and working hard and they’d like to not only have you as a friend but a low interest or no interest bank. Understand how you feel beforehand. Some people say if you loan money to family or friends it should be an amount you’re okay not seeing again. I don’t know if it’s that extreme, but that survey did say 71% of those people had friends who had never paid them back.

Think through your comfort level and your own Money Personality. Savers will have a hard time saying “yes” and Flyers may have a harder time saying “no”.And that’s okay. It is very okay to say no. It is also okay to say yes. Just know beforehand. Also, it’s helpful to get your spouse’s insight into your friend and the potential financial situation. They might see something about your friend that you don’t. We like the saying, “People will tell you who they are the first time, believe them.” If they haven’t paid others back don’t assume they will have a breakthrough with you. Believe in their actions.

4. Get on it.

If you do have a money situation with a friend, don’t let it linger. Don’t attack anyone, but address the issues or ask a few questions right away. Maybe they’ve just forgotten.

A billion years ago a guy in Taylors office building ran past him in the hall and said, “Hey, do you have $40? I’ve gotta meet a client.” It was a time in life when $40 was A LOT, but he dug it out of his wallet and handed it over to help the guy. Well, he never paid it back. Ever.

Taylor should have just asked him the next day. But he waited. And by the time he waited so long he had let it linger too long and then didn’t feel like something could be said. Ugh. We saw him 20 years later and the first thought that ran through Taylor’s head was, “Hey, that’s the guy who owes me $40.” He feels bad, but it was his first thought. We don’t even know that it’s the money. It’s the principle, but still.

If you don’t get right on asking for repayment, at some point you’ll just have to forget it. Or consider it a gift.

Bottom Line: Don’t let money get in the middle of your relationships. It’s not worth it.

A great friendship is priceless. Try to open up communication so you both can feel secure in knowing you respect each other’s approach to money. Have any “fun” friend stories you’d like to share (protecting the names of the innocent, of course)?

Make it happen!

Taylor & Megan Kovar

The Money Couple