Friendship: Meeting of the Minds in an Income Gap

Do you have a good friend who makes heaps more money than you do? Or is your income at the bottom of the barrel compared to your loving partner’s? If yes, congratulations! You’ve both obviously nurtured your relationship well.

Money issues can bring about powerful shifts within relationships. Differences in financial stature, in particular, expendable income, can cause conflict. Your friend would prefer to eat out at the Savoy, but you can just about afford McDonalds. Or your best girlfriend is always strutting her designer-label suits, making you feel a bit dowdy in your off-the-rack department store clothes.

Keeping these friendships fresh and fun all depends on what you put into them – a good mix of understanding, openness, compassion and love is all it takes.

Let Your Financial Situation Be Known!

Every authentic friendship requires effective communication. Without it, there is no clarity between friends.

If your friend earns lots more than you, you may need to drop some obvious hints about your unfavourable financial situation. Mentioning even the smallest matters, like your insignificant annual bonus this year, will catch the attention of your wealthier friend. Your friend will surely understand where you are coming from.

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In fact, it’s recommended that you talk openly about your situation, even though you may feel embarrassed about discussing financial difficulties. You may be concerned that your friend will start considering you as inferior. You may worry that he or she might even reject your camaraderie.

But no – this would not happen with a real friend, who would never do such things. In fact, your friend might even be able to direct you towards a better path towards improving your financial situation.

Share Your Budgetary Expectations

As friends, you want to spend time with each other. You will both plan activities to enjoy together. Remember that it will be your responsibility to let your friend know exactly how much money you expect to spend on these occasions.

Find common ground during the planning process. It may be likely that your higher-earning friend will suggest more expensive activities, and it’s at this point that you need to open your mouth and communicate about the budget with which you are working.

For those friends who are already aware of your financial situation, you may find that they need a little reminder. If your friend still insists on high-priced outings, that might be the perfect time to get innovative! Suggest alternatives that offer a comparable experience to what your friend suggests.

What To Do When Your Friend Makes More Money

For example, your friend may want to go with you to a movie at the cinema. You could suggest that you alternatively watch a favourite movie on DVD together at home. On top of that, you can tempt her with your irresistible cooking!

Of course, if you suggest thrifty alternatives every time you and your friend make plans, it wouldn’t be fair to him or her. It’s wise to save and earmark a bit of money for the occasional more expensive activity. Use these savings every so often to fulfil your friend’s wish.

Be Honest About What You Can’t Afford

There will always be lavish, meaningful events that would break your budget: excursions to exotic distant getaways, or your friend’s luxurious wedding in Hawaii. You might find it difficult to sit out such extraordinary events without feeling guilty or hurting your friend’s feelings. In such cases, be totally honest. If you cannot afford these activities, say so immediately. Your friend will certainly understand your position.

Weddings are particularly stressful and often problematic to organise. For this reason, a direct “no” to your attendance will prevent complications during her preparation process. Don’t delay being honest about pulling out, because your friend will become irritated with you the later the preparations progress. If you were invited to take on an active role in the wedding, like serving as a bridesmaid, remember that your friend will need to start looking immediately for a replacement.

Do not try to arouse a guilty conscience in your friend, but show how valuable their “big day” is by expressing your appreciation in other ways. There are many budget-minded gifts that you can come up with. You could offer to edit the wedding footage or to help with posting the thank-you notes.

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Otherwise, take a good look at your finances and attempt to tackle these situations by being honest about how much you can afford. You might decide to travel in the cheap seats by flying economy class. Consider sharing your room with others at a low-cost hotel or hostel. Skip the expensive parasailing or waterskiing and just chill out at the hotel pool. Be sure to let your friend know about all these things beforehand to avoid an uncomfortable situation.

Be Courteous and Appreciative When Your Friend Helps You Out

As a true friend, it will be quite obvious that your friend will want to help you out financially at certain times. When a friend lends you money, be grateful for it. Show appreciation simply by repaying it really as soon as you can. He or she might not demand an instant repayment but paying it off quickly will be highly appreciated.

Even if your friend does not establish a solid deadline, set one yourself to keep yourself on track. Additionally, you can express your gratefulness even more by paying back a little interest on your friend’s “loan”. Just give your friend a simple treat and it will mean a lot to him or her.

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).