Expert-Recommended Tips For Discussing Finances With Friends

By: Angela Serednicki

For many Canadians, the daily cost of living feels more expensive than ever before. As everything from groceries to monthly rent increases, it might not be a surprise to learn that over 25 per cent of Canadians can’t afford a sudden $500 expense. But no matter how high the price tags might be, life continues. Whether you’re asked to be a bridesmaid at your best friend’s wedding or want to go to dinner at a new restaurant, setting financial expectations and communicating our budgets with loved ones makes a world of difference.

Money expert Jessica Moorhouse, and creator of the course Wealth Building Blueprint for Canadians, answers some of the most commonly Googled questions about discussing finances with friends.

How can I help a friend with financial problems?

“One of the best things you can do as a friend is listen without judgment or advising unless asked. When people are struggling, they often need to feel like they have support and someone that feels safe and who they can talk to and trust,” says Moorhouse.

After listening to their concerns, ask them how you can help. Do they just need to vent? Are they asking you for assistance in seeking professional help? Ultimately, deciding how to respond if they ask for financial support is up to you.

Just remember: Setting boundaries is essential, especially if it’s not something you feel comfortable with or can afford, Moorhouse says. “Money complicates relationships, so you might not want to get involved.”

If this is your situation, try redirecting them to someone who could help them manage their money, like a credit counsellor or financial planner.

What are tips on travelling with friends with a lower or higher budget?

Before booking a vacation with friends, you need to talk to your friends about the itinerary and overall budget. “Talking about the financial aspects of a trip is the best way to avoid any awkwardness down the road,” Moorhouse advises.

Figure out together how you’ll split costs, where you’ll eat, and what activities you’ll do. If you can’t all agree, have other ideas ready.

For example, if your friends want to shop but you can’t afford it, suggest doing something free like going for a hike or swimming in the hotel pool. “In most situations with friends and money, open communication with no judgment is key.”

Is it OK to lend money to friends?

Moorhouse explains that lending money to a friend or family member is a very personal choice. “In my family, we believed that if you’re giving money to friends or family, it’s better as a gift, not a loan. This way, you avoid problems in the relationship or feeling bad if they can’t pay you back.”

However, if you decide to lend money to a friend, it’s important to set clear rules. For example, you can say it’s a one-time thing. Or you can set expectations, like when they need to pay you back. “Even with these expectations and boundaries, your friend might still ask for more money, not pay you back on time, or even forget about it. These are the risks when you lend money to a friend.”

Another option could be to tell them about other places they could borrow money from, like a bank or a lending company. Of course, you can lend them support in other ways. Moorhouse suggests saying, “I can’t lend you money, but I can help you plan for your budget or just listen if you want to talk.”

Should you talk about money with friends?

“Yes! We talk about everything under the sun with friends (e.g. sex, politics, relationships), so why wouldn’t we talk about another big part of our lives, like money?”

Moorhouse says this could be a great way to learn from your friends or offer support if someone you know is struggling but doesn’t know how to ask for help.

“Not everyone is comfortable talking about money, so you must respect where everyone comes from. And when I saw people talk about money, you don’t have to share private information such as income or net worth,” she says.

If you want to start discussing money with friends, approach the topic of money habits first. For instance, you could ask if or how they’re saving for retirement or how they’re saving on groceries during inflation. Moorhouse says this is an easier way to start introducing the topic of finances and money with friends.

What if I can’t afford my friend’s wedding events or a more expensive lifestyle?

Moorhouse likes this famous saying about personal finances: “No one cares about your money as much as you do.” In other words, you need to stand up for your finances because no one else will.

“Your friends aren’t going to pay off your debt or give you money for retirement. You are responsible for those things, so you need to once again set clear boundaries with your money with your own financial goals in mind. I know it can be difficult saying no, but remember, life is long. Just because you miss one trip doesn’t mean you won’t be able to go on the next one.”

Moorhouse says that discussing your social budget helps with daily activities with friends.

“Good friends understand if you’re in a different financial spot,” she says. Grabbing a coffee or an ice cream cone instead of going out to brunch or taking your dogs to the park together over a trip to the mall are some budget-friendly ways to still hang out with friends. And in the long run, you’ll never regret these smart moves.

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