Friends & Money: The Social Survival Guide

Intro_IMG_2466_rphotographed by raven ishak.
Let’s face it. Money talk makes us squirm. We’ve all been there: the celebratory dinner when your share (including someone else’s cocktails) came to $50 more than you budgeted for; the shopping expedition when a friend let it slip that she outearns you by $30K; the e-mail from a buddy asking you to pleeeeeaaaasssse unleash your editorial eagle’s eye on her soon-to-launch website.
When friends and finances combine, it can spell trouble. But, it doesn’t have to be that way. Our panel of money experts agree: The way we talk about money doesn’t reflect our checking-account balance so much as it mirrors our satisfaction with ourselves and the choices we make. To smooth dollar-related discussions, all you’ve really got to have is a positive sense of self-worth and clear communication skills. Here’s how to handle those awkward money conversations, take the reins of your fiscal well-being, and build better friendships along the way. Your heart — not your wallet — is about to feel a lot lighter.
FriendLoan_IMG_2440_rphotographed by raven ishak.

When A Friend Asks for a Loan

If you can afford to give a friend the money she needs, by all means, do it. But, note the key word: give. “I have a cardinal rule for this,” says Helaine Olen, a blogger for the Guardian and author of the recent book Pound Foolish. “I never ‘loan’ money to friends. It’s so awkward to ask friends to pay money back that it’s just not worth the friendship.”

In other words, if you can’t give the money outright, without expecting to get it back, just say, “I can’t afford it.” You have to take care of yourself before you take care of family members or friends. “Your cup needs to be full in order to give,” says Kate Northrup, author of Money: A Love Story, out September 10.
If cutting your friend a check isn’t an option, offer up your time. Brainstorm alternative money-making possibilities with her. Train your trendcaster’s eye on her closet to pick out pieces that would yield big bucks this season at a consignment shop. If she’s a former HR whiz, recommend her services to five friends whose résumés could use a polish.
When you’re the one in need, consider writing a detailed letter — not an email — to a friend explaining what’s going on, the amount you need, and the terms of repayment, suggests Kate Levinson, author of Emotional Currency. “A letter gives the person you’re asking time to contemplate the situation,” she says.
FriendsMakingBank_IMG_2365_rphotographed by raven ishak.

When Your Friends Are Making Bank — But You Aren’t

Fight the urge to compare yourself to that former classmate who makes tens of thousands more — or less — than you. “In general, comparison leads to feeling bad, just in life,” says Northrup, citing a statistic from the film Happy: Above about $50,000, an increase in annual income doesn’t significantly boost a person’s happiness.

Instead of getting critical, ask yourself: Why am I looking to my friend for validation? Regardless of whether you’re on the upper or lower end of the pay scale, Levinson suggests mulling over your feelings in light of your life experiences, your childhood relationship to money, and your parents’ financial situation. Meanwhile, remind yourself of how your money priorities correspond to your personal values. For example, Northrup has a neighbor who bartends 15 hours a week and lives a sparse vegan life because he wants to spend the rest of his time volunteering and working on other projects. Living with intention, and planning for your needs and wants, should be the aim — not measuring up to someone else’s idea of success.
Once you’ve thought all that through, speak up! Ask your friend to sit down with you for a conversation. Tell her that that you feel uncomfortable when deciding where to go for dinner or shopping or on vacation. Initiating that talk might feel awkward, but it would be a shame for a friend to decline your invitations because she feels out of place — or for you to miss out on a killer party because you do.
FriendsSplitBill_IMG_2388_rphotographed by raven ishak.

When Your Friends Want to Split the Dinner Bill — But You Don’t

Ah, the girls’ night out conundrum. The tapas and craft cocktails just keep coming, then the check arrives. Everyone whips out her iPhone. A few minutes of earnest tapping at the iCalc pass, then, finally, someone suggests splitting it evenly. The table breathes a collective sigh of relief for taking the less complicated way out.

But, if the equal-opportunity approach doesn’t leave you breathing easy, experts agree it’s best to speak up before dinner. Let your girlfriends know you’re watching your wallet this month. Warn them that you plan to eat beforehand and come only for the company — or to eat sparingly and pay only for your portion. Northrup and Levinson say it’s fine to pay for your meal alone or to request separate checks. You might sweeten the deal by covering your share in cash and letting a friend pocket it (that could earn her points on her credit card or help her avoid an ATM fee).
On the other hand, Olen advises that if you’re at a restaurant you can afford with people you see regularly (and there’s not a serial abuser in your midst), paying an equal share probably is the best policy. “I feel like it’s all going to come out in the wash over a period of years,” she says.
FinaceQuestions_IMG_2421_rphotographed by raven ishak.

When Personal Finance Questions Rear Up

For New York City dwellers, cocktail party conversation about rent is standard fare. But, when it comes to other purchases and to salaries, even Manhattanites clam up. Of course, it’s always socially acceptable and perfectly okay to say you’d rather not discuss what you make, what you paid for something, or what you charge for a service — even if it creates an awkward moment.

Still, it’s worth asking yourself why those questions make you cringe. Is it because you haven’t consciously decided how you make and spend your money? “When both parties are owning their choices, it’s not uncomfortable anymore,” Northrup says.
When you do open up about money issues, be choosy about the friends you confide in. As Levinson points out, the friend who talked you through your divorce or coached you through a job change might not be the best person to dish with about finances.
Women in particular benefit from frank salary talk. Those conversations are the only way to know if you’re being underpaid. (“And, if you’re a woman, often you are the one being underpaid,” Olen says.) Lilly Ledbetter bravely trained a floodlight on the fact that women today make only 77 cents for every dollar paid to men. If we don’t talk about money, how will we know if we’re being discriminated against?
FriendsHireYou_IMG_2379_rphotographed by raven ishak.

When a Friend Wants to “Hire” You

If you’re a writer or a therapist or a hairdresser (or any professional who renders a service), you’ve probably had friends and family ask you for “advice” or “help.” Such requests put you in a pickle — how much is fair to charge?

Olen recommends alotting everyone the same rate and keeping things very clean. “Money is money is money,” she says, “and either you can afford it or not.” You can always refer a friend or family member who’d like to pay less to someone you trust.
Another option is to devise a sliding scale and quote all clients on a case-by-case basis. When setting that scale, be conscious of not slashing your rate to a point that would make you feel resentful or affect the quality of your work. Don’t be surprised if some friends and family feel entitled to a discount rate — or if others feel uncomfortable paying less. That’s why you need to have a conversation up front about the job specifics before you quote a rate.
You might also barter with your services — but make sure it’s an even value-for-value exchange. Say you’re a copywriter and your massage-therapist friend’s brochure could use an overhaul; perhaps you could trade editing for a few free massages, Northrup suggests. As long as you both feel satisfied with what you’re getting and giving, you’re golden. And, when it comes to your money, golden is as good as it gets.

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