Finance – Friends with money

Being an adult with a low-paying job and trying to budget is hard. So what happens when your friends are loaded?

Navigating certain social situations feels awkward when money is involved. Take, for example, an occasion when everyone suggests you split the bill after you’ve ordered only a plate of chips and juice; or when you tell everyone in the WhatsApp group that you can’t afford that trip to Mpumalanga. It’s uncomfortable, to say the least. You don’t want to be that friend who’s always making money excuses, but at the same time, you don’t have to succumb to the pressure to keep up with friends who earn more than you.

According to the 2016 Money Habits & Confessions Survey by LearnVest, only 22% of people surveyed say they’d turn to their friends first to discuss a new financial resolution. We like to think that our friendships are strong enough to handle financial differences. But the truth is that money can make things awkward, especially when one of you earns more than the other.

JUST BE HONEST

You may not want to tell friends how much you earn, and neither do you want to begrudge them career success. But, says Hannah Maundrell, the editor of money.co.uk, it’s important to be honest. “It can be really tricky if your friends or family earn more than you. Ultimately, honesty is the best policy to avoid putting yourself in any awkward situations. If you can’t afford to take part in expensive activities you’ve been invited to, talk to them about your situation, otherwise they’ll never know.”

Thobile, 28, couldn’t afford to chip in with her friends for a birthday gift for their mutual pal, so she told her friends about it. “The money I was asked to contribute was more than the amount I was planning to spend. So I offered to use the money I had available to buy a separate gift instead. Fortunately, they understood.”

Financial planner Sonia du Plessis advises: “Friends don’t need to know what you earn, but there’s nothing wrong with being open and telling them that you’re looking at your budget and will be cutting down on your entertainment expenses, until you’re back at that stage where you can afford to splurge more. Your friends should respect where you are in terms of your life stage and that we’re not all in the same careers.”

Another financial planner, Barbara Mundell, agrees. “If you do come clean about your finances, your true friends will remain, whereas others may not stay. There’s no benefit in pretending that you’re someone you’re not. At some point, you won’t be able to afford the ‘pretend role’ and you’ll be stuck with a heap of debt.”

Londiwe, 32, a Joburg-based freelance writer, shares a flat with her friend. She recalls the time when income differences caused friction in her friendship: “I had trouble keeping up with my bills the first few months of moving in with her. My friend was paying for most things in the house, which made things uncomfortable and made her almost like the head of the household. I had to ask permission from her to bring someone over.”

Du Plessis says: “You should never feel less important based on what you earn. You should not have friends who judge you according to the car you drive or the house you live in. If that’s the case, you’re mixing with the wrong crowd. You should never feel that you have to maintain a certain lifestyle to keep a certain group of friends.”

DON’T EXTEND YOURSELF

Borrowing money is all well and good now, but what about later? “You could end up in debt, which may make you feel resentful towards your mates,” says Maundrell. “If your friends or family offer to lend you money so you can join them, think about whether you can really afford it. If you can treat their generous offer like a loan, then agree to a strict deadline for the money to be paid back, write it out on paper and offer to pay interest if you can afford to.”

Psychotherapist Glyn Morris gives an example of how he helps his clients work out what it is about their earnings that bothers them. “Let’s say you earn R14 000 per month and your friend earns R20 000, ask yourself: ‘What meaning do I attach to that?’ What makes things worse is the meaning you think the other person is going to attach to it.

“This has a huge impact on selfesteem. If our self-esteem is rocky,

then we’re much more prone to depression, anxiety and stress. We disqualify the other areas where we may be doing well – our intellect, our wisdom, our generosity. That builds into worse thoughts, where we magnify the achievements of others while minimising our own. When we’re making these thinking errors, we’re just fuelling the emotions that don’t serve us very well.”

Mundell suggests thinking of alternative plans when you can’t afford what’s been suggested. “Tell your friends that you won’t participate in expensive dinners at five-star restaurants or go to the cinema three times a week, but will rather host a movie night at your home. You can also look for cost-effective ways to have fun. Picnics are popular and so much fun.”

Laura Adams, author of Money Girl’s Smart Moves to Grow Rich, agrees. “The biggest financial mistake you can make with friends who have more money than you is to avoid being honest about the types of activities you prefer doing, and end up feeling uncomfortable or pressured to overspend.”

So, think out of the box and have fun the responsible way.

HAVE A BUDGET

The Old Mutual Savings and Investment Monitor Survey, published in July 2014, states that only 65% of income is spent on consumables and living expenses. Of those interviewed in the survey, 38% said they were saving less than they had in 2013. Four years later, people say the same thing. This means we’re spending more than we’re saving. One of the best ways to manage finances is to budget.

But sticking to a budget can be a challenge when your friends continue to spend on restaurants and holidays, says Zamandlovu, 36, a Durban-based teacher and a single mother of two. “I have friends with high-paying jobs and they always suggest that we go to expensive places. I draw up a budget every month, but end up spending more than expected.”

Mundell says there’s no easy way to manage your finances; it takes discipline. “Cover your essential items first, and allow yourself funds for entertainment. If possible, transfer this amount into a separate account and be disciplined enough not to use other funds. If it’s too hard to maintain this level of discipline, find a financial advisor to help you.”

Maundrell advises: “Be grateful. We’ve all been jealous of someone else’s incredible life, but it won’t get you anywhere. Communication is key, as is being happy with what you have. You probably have more than you’ll ever need to feel content, and true friends will love you regardless of cash flow.”