Ever have difficulty talking about a money situation with your friends, family, colleagues at work, or significant other? Sure, you have, and you are not alone. Money, along with politics and religion, can be taboo topics. Being awkward in money situations with others can be uncomfortable, cause envy and add stress in relationships. In extreme cases, distrust may lead to financial infidelity, marital discord, and even divorce.
However, it may be helpful to gain comfort in dealing with financial issues in common situations without breaking too much of a sweat.
When You Are In A Different Economic Situation Than Your Friends
Post-graduation from high school or college, your friends, may take different paths. Some pass on going to college and head straight to work after high school. Others work after college, with plans to go to graduate school. Some commit to going directly to a graduate program, like business, law, or even medical school. You may be in different economic circumstances and make different choices. When you earn less than your friends, don’t shy away from being together whether eating out, shopping or going on a vacation. Prioritize what is most important to you.
Be honest with your friends if you recognize that you cannot afford to spend as they do. There are several things you can say upfront to thwart any embarrassment for you. You can be direct, saying, ” I am not able to spend X for dinner, but I will order what I can afford” or “I am saving money to do X, and I am somewhat limited now.” Make suggestions like outdoor experiences when your friends are making plans to do something.
When your group is picking a restaurant, splitting the bills can be challenging, you can opt for a small salad. Tell your friends ahead of time of your preferences if there is a better dining choice for you. Make sure you can cover your bill with cash. I had experienced awkwardness in both spectrums when I earned too little or was the higher earner. Being with my friends was what mattered most. It takes some finesse to navigate, but good friends are worth being with. Find out ahead of time and learn how to reciprocate such as having friends over for dinner.
Shopping With Others With Different Spending Habits
Ever go shopping with friends for clothes you have no interest in? I have and I will return items that I know I won’t wear. However, when I was younger I was often afraid to hurt my friends’ feelings so I would keep the clothing. Later, I realized they wouldn’t care a wit if I ended up not buying their suggestions. The point of shopping is to have a fun afternoon with friends. Overspending for the sake of an outing will be a regret later on.
We are particularly prone to overspending when we shop in a group, especially being with people who have more ease at purchasing high ticket items. It is easy to get that shopping buzz and justify that impulse. That said, know who you are going with and whether it will be a good experience or a waste of time. Shopping with like-minded friends can be helpful and less stressful. Other times, when I need to get a specific dress or outfit in a hurry, I prefer shopping alone, with my daughter or a close friend.
Holidays are a particularly stressful time to go shopping for gifts for family, friends, and coworkers. Take a list and be careful when shopping in a group during this time.
Making A Loan To A Friend Or Being A Co-Signer
Being asked for a loan by a friend or family can be awkward. Just because you are earning more money does not necessarily mean you have to make a loan. You may have many uses for your money, notably savings and investments. Sometimes it is a small amount, such as when a friend forgot a credit card or their card didn’t work. It happens to everyone. Usually, your friend will pay you promptly back, or it is for a negligible amount.
On the other hand, a friend may be having significant money problems. Now you are being asked after his or her family or other friends have declined. Continually borrowing from others may be a red flag. I have been in this situation a few times and it is never easy. There are several things you can do:
You can politely and promptly say no. It may be your rule or that of your significant other not to make loans given your situation. Consider the relationship you have with this person and this person’s character. There may be other ways to help a friend resolve their debt or money issues, such as creating a budget or recommending a financial counselor. The following story is instructive from one of my favorite books.
Should Rodan Lend Money To His Sister? Ask Mathon
In The Richest Man In Babylon by George S. Clason, Rodan, the old Babylon spearmaker, has a dilemma. He earned fifty pieces of gold as a reward from the King. For Rodan, this was an absolute fortune he had never held in his hands before. He went to ask the advice of Mathon, the gold and jewels lender. Rodan’s sister is having financial difficulties and has asked him for a loan, but Rodan doubted her lazy husband would repay. Mathon told Rodan how he decides when to lend money:
- Safest loans are when the borrower has valuable possessions that could serve as collateral;
- When a borrower can earn money because of a particular skill or talent; or
- The person seeking a loan is honorable or has a guarantor to pay back the money.
Recognizing that he was letting his love and emotions for his sister get in the way, Rodan pondered and realized his brother-in-law would put him in a worse financial situation. Ultimately, Rodan declined his sister’s request.
If you want to help this person, it would be essential to work out a budget and a timetable for repayment. The agrement should be in written form and signed by both parties.
Alternatively, a friend may ask you to co-sign a loan because you have excellent credit. You could be on th hook, and your credit score could suffer if your friend as the borrower fails to make payments on time. While co-signing for your child’s student loans is probably a given, you should not feel the same obligation for a friend. I would advise passing on such a situation.
Once making a loan to someone, it is essential to remember not to pass judgment on how they use or spend the money. Better to find out ahead of time.
Roommate Agreements Will Spare You Some Discomfort About Money Issues
Living with roommates can bring out inelegance when dealing with money. While sharing an apartment or house is a great way to save money and have independence, there will inevitably be challenges. Everyone’s name should be on the lease so that the responsibility is somewhat split.
Before taking an apartment, pick your roommates wisely and make sure you all agree to the place, its rent, and requirements. Good friends don’t always make the best roommates and vice versa. Find out about your prospective roommates by word-of-mouth or social media. Consider each person’s financial ability to pay for the place you have selected and whether it is affordable for all. Everyone’s name should be on the lease and respect due dates for rent and related bills. Do not agree to be the sole account holder as your credit will be at risk, not the others.
A roommate agreement (RA) may be an excellent way to divvy up responsibilities, accept rules and set up a protocol for known issues. An RA may not be legally binding as your lease. They are relatively prevalent in colleges. Among problems that can be covered by an RA are:
- Paying of bills (rent, renters’ insurance, gas, electric, internet, cable) by the due date;
- Communal space;
- Sharing of groceries and meals, especially if someone is a competent cook;
- Chores, keeping space clean and rotation schedule;
- When friends/significant others stay over;
- Dealing with a roommate who lost a job, and can’t contribute;
- Parties and reasonable noise levels; and
- Roommates are paying for damages to the apartment.
You won’t consider every possible conflict you and your roommates will face but an RA will help put a framework in place. Recognizing everyone has their habits, foibles, stresses, and needs for personal space is essential for making a living together with a good reality.
Asking Your Boss For A Raise
Finding out your peer is making more money than you doing the same job is frustrating. It may also add some resentment towards that colleague or, at the very least, be awkward for you in dealing with that person and your boss. Rather than obsess over it, it is time to ask for a raise. However, when doing so, be thoughtful, calm, and without anger..
Being informed about the gap in your compensation should be used as motivation to speak to your manager. Whatever you do, don’t throw the person who is making more than you under the bus. It may look petty and nasty for you. There may be legitimate reasons for those differences that aren’t visible to you. You do not want to be rash about the conversation with your manager. You don’t want to harm or undermine the relationship you most depend on, at work.
HR First Stop
Instead, it is better to arm yourself with more information ahead of time. Consider whether it is a serious enough gap. Certainly, if you believe it is a gender gap, you may have more ammunition. Going to HR first may be a good strategy and be less aggressive. They usually have a handle on compensation in your department and for various pay levels. Your inquiry is an appropriate way to educate yourself about future compensation.
When you go to see your boss, make sure you say how much you enjoy working at the organization and with them. Rather than name the higher paid colleague, you can say, “It has come to my attention that others are making more than me for doing the same job, what can I do to get a raise?” Depending on the answer you receive, you may want to ask for possible benefits, such as working from home, if a raise is not in the cards yet. Alternatively, it may be time to look for another job. Sometimes having another job is the best way to negotiate for higher compensation, but only if you are ready to leave.
Learn negotiating skills so you can strengthen your ability to ask for a promotion, higher compensation, or better benefits. Women especially need to take steps to enhance their negotiating abilities. This post provides the steps to take to achieve what you deserve.
Don’t Hire Someone You Know… It Can Be Awkward
When working at a desirable company, A friend may ask if you can put in a good word for someone or get them an interview. Think carefully before you do so. It can sometimes be better to pass if you know of their shortcomings or lack of experience for the job.
One of the worst mistakes I made in the past was hiring an associate for my equity research team on a friend’s recommendation. It was a desirable job with high pay at a significant investment bank. I could not confirm the person’s background independently. I interviewed the person who was likable enough and felt more obligated than I should have at the time. I had always told interviewees the worst parts of the job: long hours, tight deadlines, and sometimes crazy pressure.
I hired this person to start soon after because of the upcoming demands for our group. Within the first couple of weeks, he would leave in the early evening during the busy earnings season.
Following many conference calls with company management, reports, and models had to be done. He had ignored the job description and the needs of our team. He was a 9-5er in a job that required significant hours.
While he was intelligent but he didn’t try to fit with the other associates. I felt awkward that I made a wrong decision by putting too much weight on someone’s recommendation that solely wanted to do this person a favor. I gave him a more extended trial period than I should have, putting our whole group in a difficult position. Ultimately, we mutually agreed he didn’t fit with us. While this happened years ago, I still feel wrong about this hire.
Talking With A Significant Other About Money
When you are first dating, you don’t usually talk about what you earn or how you deal with money. As you become more serious, however, you may want to find out about each other’s values, including financial priorities. How financially compatible you both are matters in the short and long run. It is alright if you both earn different incomes, but you should share your life goals. Your financial goals are very much a part of that. You want to avoid financial infidelity, which is damaging a valued relationship.
However, the more I talk to others about money, it is clear that couples are very awkward when discussing money. They may not know each others’ salaries, savings amounts, or debt levels. Yet money accounts for many of the decisions you will make over a lifetime with your spouse or significant other. My husband Craig and I have very different attitudes about money, which have caused many financial issues. This requires us to have awkward or even difficult conversations.
Are your credit scores compatible? While I wouldn’t recommend you share each others’ scores on the first date, how you both manage finances is a serious topic to broach down the road. Couples with different credit scores can live together but poor financial habits can cause significant marriage friction. Some 72% of Americans say they’d reconsider a romantic relationship because of another person’s debt, according to the latest findings from Finder.com.https://www.finder.com/unacceptable-partner-debt.
A Not So Funny Conversation
Couples often lie about their money, whether it is lying about their purchases or paying the bills on time. I had a funny (not so amusing) conversation with my dentist the other day about another awkward situation he once faced. He treated two spouses in his office but always separate as most couples don’t usually come on the same day.
One day, the wife and husband came together for dental work they needed to be done. The dentist was working on the wife who had a problem with her denture. The door was partially open, and the husband came in to see how much longer the wife would be as he had to leave to go back to work. When he saw his wife of 30 plus years with her teeth removed, something he never knew about, he went ballistic. He was angry at his wife’s sudden transformation, that is, being toothless, but he also demanded to know how much it cost and why hadn’t she told him. They left this office, apparently a very unhappy couple!
The bottom line is that you need to be open, transparent, and honest about your significant other’s financial issues. Hiding financial problems could lead to different circumstances, distrust, and, potentially, divorce. Deal with it gracefully and early so you can resolve the issues together.
When People Tell You How To Spend Your Money
People usually mean well when they give you advice on your clothes, weight, or working too hard. One sensitive area is money and how you should spend it. After some success on Wall Street, I still lived relatively modestly.
However, I recall getting a few comments that made me wince, such as:
“What are you doing still in such an apartment?” That apartment was a convertible 3 bedroom co-operative apartment on the Upper East Side. We had plenty of room for my husband and me before we had kids and our dog. We did move to a bigger apartment, but I still miss that “smaller” one.
“For sure, I thought you’d be living at least on Fifth Avenue, why aren’t you?” Same apartment as above and from my mother’s best friend. She came to our home after my mom’s funeral. She thought my apartment did not convey the image of success she expected.
“Why do you work so hard if you are not going to spend what you earn?” My boss, also my mentor, spoke to me with concern after he gave me a promotion (to managing director) and a sizable bonus. I had a look of worry rather than glee, and he was disappointed. I explained that the higher the compensation the more that would be expected of me. I had been previously viewed as an underdog and wanted to remain so. He lectured me on my lack of a second home, not taking vacations, and driving a sh***y car.
Parental Influences on Our Money Values
I chuckle now when I recall these awkward moments. However, I didn’t like hearing it at the time. I remain happy to be frugal about prefer spending wisely. I should have answered with grace, “We are happy living here now and will see where the future takes us.”
Regarding my work ethic, that is working too hard or buying something I could afford was a different topic. My boss was somewhat right, but I loved my job. Longevity on Wall Street is relatively short, akin to being an athlete. I guess it was my cautious nature to save and invest.
Also, I never had a lot of free time to shop or take off from work. I had relatively little debt and liked spending below my means. I wanted experiences over material things at the time. My brother, a very successful physician, was as frugal as I was, if not more so. Monetary values learned during our upbringing often influence our adult attitudes.
An NBER study found parents’ attitudes toward debt can significantly influence children about their approach to spending and borrowing money. As an adult, they tend to adopt conservative views towards debt. Tendencies go the other way as well. If your family tends to be splurgers, there is a good chance you will be one too. We can always learn better financial habits to counter inclinations towards overspending and higher debt accumulation. It may take effort and more conscious behavior to change, but it is doable. Parents should talk to kids about money.
Frugality means being more conscious of your spending and getting what you most value. It should not mean obsessing over every dollar to the point of not being able to enjoy your life and be happy. Keep the right balance in your life that you can maintain. Yes, money can buy happiness if spent the right way.
Giving To Charities At Work
Friends or coworkers may ask you to contribute to their charities at work or on social media. It may be small amounts or to a worthwhile charity. However, sometimes there are too many people asking for support at the same time. You may have several charities on your list. Just let others know that you appreciate that they are asking but you are giving money to your charities.
Don’t feel pressured into giving to others unless you ask them to support yours. If you don’t want to give to others, tell them you have your list. In an Awkward Money Moments survey by CouponCabin.com, 34% of people felt pressured to donate to a charity on behalf of a coworker, family member, or friend, making them very uncomfortable.
We experience awkwardness when dealing with common money situations. Talking about money is a sensitive topic but frequently arises with our friends, families, coworkers, and bosses. Be open, direct, and honest when you can with others. Learn to say no when people ask for money if you aren’t able to make loans or give to charities.
Your own financial situation should be in harmony with your own beliefs, values, and abilities and doesn’t have to be compromised when you are with other people. Don’t shy away from asking for a raise but learn the power of negotiating for yourself. The awkwardness of money can be stressful, provoke distrust, and ruin relationships. Always deal with money problems head-on with significant others. Like Robert Frost said, “The best way out is always through.”
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With a passion for investing and personal finance, I began The Cents of Money to help and teach others. My experience as an equity analyst, professor, and mom provide me with unique insights about money and wealth creation and a desire to share with you.