Protect Yourself — and Your Friendships
You might have your own finances under control, but if your friends engage in bad money habits — from overspending to leaning on you for financial help — it could spell trouble for you and your bank account.
If you have friends who are having trouble managing their finances, it’s important to know how you can you keep their bad financial habits from costing you money or, worse, rubbing off on you. Here are five common types of financially troubled friends, and how you can protect yourself as well as your friendships.
Not all moochers expect you to help them out with an overdue bill or “forget” their wallets when they meet you for dinner. Oftentimes, it’s more subtle than that, says Jill Jacinto, personal finance reporter and managing editor of the career site WORKS by Nicole Williams.
“I had a friend who was constantly ranting about not having enough money,” Jacinto notes. “During brunch one day, she mentioned that she had several other friends who ‘helped her out,’ and treated her to drinks, dinner and so on. I saw where she was going with this, and I quickly explained that I’m [focusing on] saving money,” Jacinto says.
The fix: When it comes to shutting down moochers, it’s all in the delivery: “I made it light-hearted and said no one has enough money these days, right?” says Jacinto. “And added: Aren’t we all trying to save?”
Clarifying that you’re trying to save money can dissuade your friend from asking for money without making her feel self-conscious. You can also avoid awkward situations by planning activities where a subtle cash-grab isn’t likely to happen: “I’d either try to pick hangout options that were free or at least very low cost — street fairs, bike riding, museums,” says Jacinto. “Or pick events that you need to pay for in advance.”
The Chronic Under-Earner
You may have a successful career, but if your friend is consistently underemployed, or unemployed, it can put a strain on your friendship — particularly if she is struggling financially.
The fix: It’s helpful to understand why your friend is in that situation. “The under-earning friend may be a younger work-in-progress, someone undergoing a career change or someone [working] in a field that does not compensate that well,” says Justin J. Kumar, a Chicago-based licensed personal financial advisor with Wells Fargo and an expert in behavioral economics. “Sometimes, the best way to spend time with this friend is to invite them over for a glass of wine or meet for coffee so they don’t feel pressure to spend a lot of money they don’t have.” Focus on spending quality time together without spending a lot, so you can keep her from feeling self-conscious about her salary or anxious about trying to keep up financially. If she refers to her underearning, you may also want to help her explore what’s holding her back in her career, so she can overcome it.
One of my own friends falls into this category. She pursues expensive hobbies like equestrian riding that require a lot of costly equipment and travel — but struggles to pay the rent on her modest apartment, has no retirement savings and thinks having an emergency fund is for pessimists. I feel poor whenever I hang out with her (even though I know, rationally, that’s not the case — I’m probably in better financial shape than she is!). Still, her lifestyle sometimes makes me feel as if I’m missing out on “the good life.”
Often, these are friends who unknowingly feel they have to buy friendships, says Katherine Crowley, a psychotherapist and co-author of the bestselling books “Mean Girls at Work” and “Working With You Is Killing Me.” “You may feel manipulated and controlled by their money.”
The fix: While hanging out with overspenders can be fun at times — especially if they’re spending their money like water on you — stay on your guard. “Never try to keep up with them on a spending basis because it can lead to deeper concerns on your home front,” says Kumar, like the maxed-out credit cards that can result from feeling obligated to accompany them to fancy outings you can’t afford.
If your friend’s overspending is getting in the way of your friendship, set limits, Crowley says. “Agree to a limit on what you both shell out on any occasion or for any trip.” Better yet, instead of enabling your friend’s bad habits, suggest less expensive activities you can do together, like going for a run or meeting for a drink instead of a meal.
While hanging out with profligate spenders can do a lot of damage, listening to skinflints’ well-meaning advice can also harm your finances, says Syble Solomon, a life coach and financial educator who created Money Habitudes, a card game that teaches people how to talk about money.
If they’re solely focused on saving money, “it may also mean that you then tend to spend money on the cheapest thing possible, like the used car that’s always breaking down, the clothes that fall apart after three washings, or you don’t take a vacation or invest in yourself [by, for example,] going back to school,” explains Solomon.
The fix: Being friends with a cheapskate doesn’t have to be dull or guilt-inducing, Kumar says. “Go to a discount store or flea market to learn more about how they [handle] money,” he says.
On the flipside, you can be the one who shows your cheapskate friend there are some things worth spending money on — like a nice suit for that big job interview, a reliable new car or an MBA that can lead to a higher salary in the long run.
If you have a friend who constantly pooh-poohs your financial accomplishments and then brags about how much more she earns and saves — “Well, it’s great that you managed to save $1,000. I just made a huge killing in tech stocks!” — she’s a one-upper, says Zinn.
They can inspire you, or they can deflate you, depending on their delivery and intent, says Kumar. So be prepared.
The fix: “When you walk away from a [one-upping] exchange, check to see how you feel,” advises Janet Zinn, a New York-based licensed clinical social worker and resident couples’ therapist on XOX Betsey Johnson, a program that aired on the Style Network. “If you feel empowered and inspired by the conversation, then [follow] their savings and investment strategies. [But] if you feel poor, embarrassed or bad about yourself, then you know they just needed to one-up you.”
That said, you can still sometimes learn from these exchanges. “We all come to our finances from different places. If we can learn and share and grow together, great,” says Zinn. “If, however, there is competition, shame, guilt or resentment, then growing apart may be a better strategy.”
A true friend, after all, cares about your whole well-being — financially as well as emotionally, socially and otherwise, says advice columnist April Masini.
Jill Elaine Hughes is a Chicago-based freelance writer specializing in personal finance, careers, and health/wellness issues. She has written for the Chicago Tribune, the Washington Post, the Chicago Reader, Phoenix Forward, and many regional magazines. She is also a novelist. Visit her on the Web at www.jillelainehughes.com. Twitter: @JillEHughes