The Problem With Friends & Money

By the time the waiter brought the second round of sake, Katherine, a 28-year-old graduate student, was in panic mode. She had already calculated the cost of the sushi rolls her friends had ordered for the table — $15 for the soft-shell crab, $12 for the tuna, $4 per oyster. And those were just the starters. “I was kicking myself for not looking up the prices on the menu beforehand,” Katherine says. “A bunch of my friends work in finance, so they don’t think twice about dropping $150 on dinner. But all I could think was: I’m literally eating what could be my phone and Internet bills for this month. It’s in my mouth, and it tastes like raw tuna, and I want to cry.” Here’s the thing: Your pals might not notice that you’re freaking out across the table. It’s like that Friends episode where Ross, Monica, and Chandler insist on “going somewhere nice” to celebrate and don’t think twice about ordering appetizers and entrées. Meanwhile, Rachel, Phoebe, and Joey are ordering the cheapest thing on the menu and freaking out when Ross wants to split the check. (As Rachel puts it to the other two members of Team Broke, “Do you guys ever get the feeling that Chandler and those guys just don’t get that we don’t make as much money as they do?”) Abandoning your budget in order to keep up with your friends isn’t just stressful; it’s also unnecessary. “Don’t let other people’s financial situations dictate your money life,” says Sophia Bera, a certified financial planner and founder of Gen Y Planning. “Focus on you and what you can do to be smart about your money — and let go of the rest.” That makes sense in theory, but is it normal to feel at least a little jealous when your friends are making it rain and you’re still waiting for a spritz?

“It’s natural to compare yourself with your friends,” says Irene S. Levine, PhD, psychologist, author of Best Friends Forever: Surviving a Breakup with Your Best Friend, and creator of The Friendship Blog. “Even as young children, we develop our sense of self by observing other people, adapting new interests and ways of being in the process.” This tendency is not without its pitfalls, however. “Of course, sometimes when we compare ourselves to friends, we fall short," Dr. Levine adds, "and so it’s also normal to feel a bit jealous.” Natalie, a 29-year-old who works in fashion, says that she feels most envious of her higher-earning friends when scrolling through Instagram. The sunsets. The cocktails. The hashtags — #sorrynotsorry, #nofilter, #vacationproblems. “I’ll admit it; sometimes, I feel jealous when I see friends who can afford to go on nice vacations, and I’m on the staycation track,” she says. “I have actually avoided looking at Instagram when I know certain friends are away, so that I don’t torture myself.” Shopping with a friend who makes more can also make you go green with envy — even more dangerously, it can cause you to spend more. Earlier this year, the budgeting software company YouNeedaBudget surveyed 1,000 people and found that 64% of us spend more money when we shop with friends. Amy, a 32-year-old copywriter, knows the feeling. “I have a friend who shops in a completely different price bracket than me. I’m Zara; she’s Barneys,” Amy says. “I get caught up in it… I’ll spend $80 on a super-thin tank top because I watched her spend $1,000 on a bag like it was nothing.” Afterward, Amy says she feels buyer’s remorse. “Then, I’m annoyed at myself and at her,” she says.

Emilia, a 33-year-old who works in media, says that when she was first out of college, most of her friends were living like she was: They had roommates, drank before they went out to save on bar tabs, and shopped at stores like H&M. But by their late 20s, there was a shift. Emilia remembers the moment it hit her: “Back then, my close friend was making six times as much as I was making,” she says. “I remember walking into her apartment — she lived in this amazing duplex, and I was living in a walk-up studio. I had a chipped nail, so I asked for some nail polish remover, and she said, ‘I don’t do my own nails anymore.’ It was the first time I realized, Oh, okay. We are on different playing fields now.” Nobody wants to be the bitter friend — or a hermit who never goes out because she’s afraid of what it will do to her bank account. So, if looking at your friend and her Chanel bag starts to make you feel bad, the first thing you should do is “acknowledge your feelings to yourself, so that your jealousy doesn’t seep out in destructive ways,” Dr. Levine says. In other words, accept that you’re a little jealous right now — and that’s not a big deal. Then, “Try to focus on the common ground between you, as opposed to the differences.” Working out together outdoors or even grabbing coffee instead of wine will take the financial pressure off your hangouts. Money can be a taboo topic among even the closest of friends, but Bera recommends being honest. “Let them know what situation you are in, so that if you do turn down a fancy dinner, they understand why,” she suggests. If your friends know you’re on a tighter budget, it won’t feel weird if you ask the waiter for a separate check when you go out — and you can more easily control what you’re spending. Your true friends will understand if you’re cutting back. If they aren't supportive? “It’s likely that there are other fundamental problems with the friendship,” Dr. Levine says.

Another point of action: Get serious about your own finances, so that you don’t feel the income disparity so much. You’ll be able to make smarter decisions in your social life when you know exactly how much you feel comfortable spending. “Start by figuring out where your money is going in the first place,” Bera says. This means looking at your biggest expenses, such as rent, car payments, or monthly student loan payments. Bera says that, although clients often don’t want to hear it, one of the easiest ways to open up some wiggle room in your budget is to get a roommate. “A lot of people don’t like to think about the big things,” she says. “But if you live with a roommate, that’s a lot more money to pay off your loans, start a Roth IRA, get on track for retirement, or travel.” Next, look for the low-hanging fruit, says Bera. These are things like canceling your cable, packing lunch twice a week, nixing your Starbucks addiction, and maybe joining a cheaper gym. In other words: quick, easy changes that could pad your budget with an extra $200 to $300 a month. After taking out your monthly expenses and cutting down on the small stuff, see how much you have left each month and divide it by four. “That’s your weekly spending amount for eating out, entertainment — any of that stuff,” Bera says. She also recommends opening a separate checking account for your discretionary income, so that you can never dip into the money you need for bills. (We'd also recommend making sure that you're contributing to a retirement account as well.) There is an upside to having friends with more money; if they’re doing well professionally, they might be able to help you in your career. Think of it as friends-with-financial-benefits. “It’s all about networking,” says Bera. “You don’t know if one of your friends might lead you to a future job possibility, or tell you about a position that just opened up where they work that you might be perfect for.”

If that’s hard to believe when your friend’s designer watch is staring you in the face, remember this: Just because your friends are making more money doesn’t mean they are happier. Do you love your job, even if it doesn’t pay a ton? Does it give you more free time than your friends who make more but are emailing from the office at midnight? “Sometimes people have money; sometimes people have time,” says Bera. “If you are wealthy in time right now, that’s really valuable.” Emilia say she understands this now. “Some of my friends who were making bank in their 20s were burned out by 30,” she says. “I love my career, and even though it sucked to be broke several years back, it’s not that way anymore.” Perhaps that's the most important piece of all of this: Like most uncomfortable friendship stages, this, too, shall pass — or at least become easier for you to navigate.