In the midst of the cost-of-living crisis that seems to be going nowhere fast, and a widening wealth gap, maintaining meaningful friendships across varying financial circumstances is becoming more complex.
According to research in the US, 61% of women prefer discussing their own death over money. Meanwhile in the UK, Money and Pension Service data shows four in every five people (81%) avoid talking about their finances with someone.
But as figures from The Money Charity show that it could take more than 26 years to repay the credit card debt on the average interest paying only the legal minimum payments each month, a personal finance expert has said the time has come to do a little money talk.
Talking can be key to addressing money differences
Maxine McCreadie from Creditfix has emphasised the need for open conversations about money to help people better manage their situation – especially in friendship circles.
“The friendship wage gap can often be an unspoken issue amongst pals. In fact, the very issue was captured in the iconic 1995 Friends episode ‘The One with Five Steaks and an Eggplant.’ Most will remember the awkwardness between the gang when Ross, Monica and Chandler want to split the bill at a restaurant even though Phoebe has only ordered a salad and tap water. Some of us will even have experienced it.
Maxine added: “Building strong friendships, especially when financial situations differ, means talking openly and really understanding each other. When dealing with money differences among friends, it’s not just about budgets. It’s about creating a space where people feel comfortable sharing their money experiences and that includes challenges.”
TikTok trend could change attitudes
However, despite many still feeling uncomfortable talking about their finances, the tide is slowly beginning to turn thanks to a new TikTok trend. The personal finance expert continued:
“Recently, a new trend called ‘loud budgeting’ has gained traction on TikTok, where people openly share their financial goals and decisions with the people in their lives. But what does that look like in real life and not on screen? Well, you might say no to a costly group trip, explaining that you’re prioritising paying off credit card debt or saving for a house deposit. The essence of loud budgeting is to confidently express your financial awareness and decisions – something that can be useful for others.
“In the end, keeping friendships strong despite money differences means talking openly, understanding each other, and supporting everyone’s journey – no matter what.”
5 ways to tackle the gap
Maxine has shared her top five tips to tackle the friendship wage gap:
1. Open communication
Don’t be afraid to initiate non-judgmental conversations about your finances. Encourage friends to share their comfort levels and be open about their individual financial situations, understanding that some may be dealing with debt. Talking openly can help avoid misunderstandings and importantly helps people facing financial challenges feel comfortable sharing their concerns. For those dealing with debt, having supportive friends to talk openly about money is invaluable.
2. Plan inclusive activities
You can’t put a price on friendship, but you can put a price tag on what you do together. When planning a catch-up, opt for activities that work for varied budgets and preferences. Instead of costly outings, consider options like a movie night at home, a hiking trip, or a book club. By planning inclusive activities, you ensure that everyone can join without feeling the strain or awkwardness of financial differences.
3. Set boundaries
It can be helpful to define spending boundaries collaboratively within your friend group. This involves openly discussing financial limits and respecting each other’s comfort zones. Establishing clear boundaries helps avoid awkward situations when planning outings or sharing expenses, ensuring that everyone feels at ease and understood.
4. Practice empathy
It goes without saying but recognising and understanding everyone’s unique financial situation is important. If a friend mentions they can’t afford something or are short on cash, offer a shoulder to lean on and support where possible. Friendship should always be a judgement-free zone – especially when it comes to finances.
5. Promote financial literacy
Whether it’s sharing loud budgeting TikToks or telling pals about an interesting budgeting tip you heard on a podcast, encourage discussions about financial wellness, budgeting, and planning. Share resources and information on financial literacy to empower friends in making informed decisions.
