We all love our friends. I mean, they are our chosen family and it doesn't get much more special than that! But just like with family, our friendships can have their own touchy subjects, drama, and annoyances. I mean, we are all people trying to figure out our stuff while cohabitating on this planet. However, over the years I've read far too many articles and studies on millennials overspending because of friendships; both directly and indirectly.
Millennials know how to have a good time, but with our generation documenting everything from graduations, to engagement parties, to bridal showers, to bachelor(ette)s, to weddings, to pregnancy announcements, to gender reveals, to baby showers, to naming ceremonies… you get the idea. Oh, and that's not even including friendsgivings and white elephant parties! The list of events goes on and on and on and, unfortunately, the cash in our bank account does not. We are a festive bunch who love our friends, but sometimes at the expense of our own financial stability.
Today's post is sponsored by Lexington Law. They are committed to helping people on their financial journey by being leaders in credit repair. They specialize in helping people identify and rectify unfair, inaccurate, and unsubstantiated negative items on their credit profile. Here's a relevant example I once heard: a roommate/friend stole my friends wallet once after a disagreement and charged a ton of stuff to their credit card. It was a nightmare to repair the damage. Yes, he called the credit card company and canceled the card but the inaccurate negative items were already on his credit report. That's where Lexington Law can come in and help you clean things up. Give them a call today for your free consultation.
5 Financial Boundaries You Need To Set With Friends [+ How To Do It!]
Nightmarish roommates aside, I'm sharing the financial boundaries you need to set with friendships. Setting financial boundaries does NOT make you a bad friend. In fact, it actually makes you a good one. You see, too often we either don't have boundaries or continuously allow violations to our boundaries. Then, we get hurt, resentful, and eventually the friendship deteriorates. While setting boundaries with friends may bring up some uncomfortable initial feelings (as anything new can); the alternative will likely bring up far more challenging emotions and situations.
Financial Boundary with Friends #1: You are not their savior or parent.
We love our friends; often they can become our second family. Ideally, it's a reciprocal relationship where you both lift each other up when you fall, are the shoulder to cry on in tough times, and are there to provide support when needed. However, friends are just that: friends. They are not our children who need to be taken care of, and you are not their savior in tough times.
I learned this lesson (unintentionally) the hard way. One of my friends had fallen on a tough time in her life. Boyfriend broke up with her, needed to find a new place to live, friends slowly started fading from her life, problems at work, etc. Which I totally empathize with; we all go through tough periods in our lives.
So when I couldn't use my tickets for a personal empowerment workshop hosted by my favorite author in the self-help space, and she saw that I was trying to sell them online, she offered to buy them but said she couldn't pay me until two weeks after the event. I figured “no biggie” and gave her the tickets.
The two weeks go by and she didn't pay me back. I asked about it and she said her pet had an emergency and she'd get it to me after her next paycheck. Another two weeks go by and nothing. This cycle of two weeks and me asking goes on for a couple of months until I just stopped. I decided I'd get over it and move on; it wasn't worth losing our friendship over. Only then she tells me she booked a cruise! That was the final straw for me. I'd spent so much time and energy supporting her, in addition to other financial sacrifices beyond these tickets in those months too, that the cruise felt like a total slap in the face. Every ounce of the resentment I was trying to let go of blew right back through me and I couldn't get over it. So I said something to her about how I felt used and taken advantage of and she proceeded to yell at me and block me across all social media.
But here's the thing: I'm the jerk in this story.
She honestly did nothing wrong other than live her life and asked for what she needed. I'm the one that was giving from an empty cup. I knew from the stories she'd been telling me about the friends she'd been burning through that she wasn't in a place to reciprocate or make decisions based off my ethical or moral expectations; yet I still tried to be her savior and when things didn't go how I envisioned, I got angry. And that's what recovering codependency looks like friends (but that's probably another post).
How to set this boundary:
A year after the situation above happened, I read a book that basically said people needed to get into the mindset of giving to friends and family, not lending. Meaning, even if a friend or family member says they are “just borrowing and will pay you back,” do yourself a mental favor for the sake of the relationship and count that money out or don't give it to them in the first place.
The author basically said that “lending” to friends and family more often than not leads to the situation I outlined above. Which I totally agree with. We cannot control what other people will do, so it's our responsibility to manage our own expectations and finances. If you won't be okay not getting the money back, then you shouldn't be giving it out.
So whenever you go to lend a friend something, ask yourself, “how would I feel if I never got this back?” If the answer is anything other than, “I'd be 100% okay” then it's your responsibility to set a hard boundary and not give from an empty cup. Again, you are not their parent or their savior. They will figure it out and be okay. Too often, people fall into the savior or parent role because of their own codependency issues and they don't learn the mental and emotional toll it takes on them until it's too late.
Financial Boundary with Friends #2: Be clear on your expectations
People are not mind readers and expectations inevitably get everyone in trouble. When a friend says, “let's hang out” that could mean a nice evening watching Netflix over some Chinese or it could mean a night out at the latest club with table service. Everyone has their own idea of hanging out. One way to cut down on miscommunications, disappointments, or your finances going off the rails is to clearly state what you had in mind.
For instance, someone says, “let's hang out;” You say, “I'd love to! I'm not trying to spend money right now, would you be down to just come over and watch the Bachelor while making pasta?” You'll be surprised by how many people happily respond with, “OMG I shouldn't be spending money right now too, that sounds amazing!” This approach also allows you to dictate the plans first so things line up with your financial goals seamlessly.
Financial Boundary with Friends #3: Come up with alternatives
Now if a friend approaches you with plans already in mind you need to keep something in mind before responding:
One of the big things when it comes to setting financial boundaries with friends, is people feeling like you don't like or care about them as much when you pass on expensive get togethers. Rather than equating your “no thanks” with finances, people tend to take things personally. My suggestion would be to soften the “no” by delivering it with an alternative suggestion.
For instance, “Hey, do you want to go to this concert with me?” You could say, “OMG, I'd love to but I'm watching my finances right now. I found this free concert in the park on this other night, would you be okay with doing that instead?” That way you're still showing that you care about the person and your friendship, but not at the expense of your overall financial well being.
Lexington Law points out that respecting your budget should be a top priority and alternatives could even include splitting costs with friends (like a hotel room, or seperate checks while eating out). Read more of their tips here.
Financial Boundary with Friends #4: Judgement free zone
It's not your place to judge how a friend is (or isn't) spending their money, and it's not their place to judge what you do with your finances either.
I grew up in your average middle class family. We went on a family vacation every year and because I was the only child, my mom would let me bring a friend – all expenses paid for them. It led to this kind of stigma that “I was rich” amongst my friend group and as I grew up, I felt like people judged me for how I did (or didn't) spend money. Like if I wanted to skip out on getting my nails done with the girls, it'd upset people because “they knew I had the money to spend,” (remember that point I just made about people taking “no's” personally!).
So I had to constantly remind myself: it's nobody's business what I do with my money. If I want to put that money towards my retirement, then that's my choice.
Now I'm not advocating that you silently sit in discomfort because you think you're being judged. Instead, I'd recommend having an honest and support conversation. Maybe even asking if the person felt upset or hurt that you decided not to join in. When people are judging, it's usually because of their own insecurities or expectations and they may not even realize they are doing it! In other words, people may judge because they simply don't understand or are taking things personally. A loving conversation where you listen and acknowledge where they are at can go a long way. Ask them if they are interested in hearing where you are coming from (never assume people want to hear the intentions behind your behavior, if someone isn't in a great headspace they may think you're just giving them excuses, stick to listening and acknowledging when in doubt). If they are open to hearing where you are at, explain your financial priorities at the moment. Regardless, keep stressing that your friendship isn't measured by how much money you guys spend together.
Financial Boundary with Friends #5: Postpone to a later date
Just because you are prioritizing your finances doesn't mean you can't enjoy the finer things with your friends! It just means you need to plan for them a little bit more! Instead of a last minute road trip, ask if you can plan a trip for 6 months out. This gives you time to set money aside in a sinking fund so you don't compromise your financial goals. Plus it gives you both something to look forward to and you'll still enjoy the trip!
Setting financial boundaries with friends does not need to be the end of your friendship; in fact, it can be what ultimately saves it from a sad demise like the one I mentioned earlier. At the end of the day, you are responsible for your financial well being and meeting your financial goals (link financial jan 1 post). Everything from planning your retirement, paying off student loan debt, buying your first home, and even repairing your credit. Seriously, a bad credit score can cost you in so many areas, read them here. Remember, if you think there are inaccurate negative items on your credit report, here for your free consultation with Lexington Law.