Mario Puzo famously said, ‘Friendship and money is like oil and water’. Yes, money is an essential component of everyone’s lives, but that doesn’t mean you can intersect it with personal relationships easily. Bringing money into a friendship is a balancing act, one that requires tact and sensitivity. When the two clash, it can cause a range of problems, ranging from conflict to jealousy and social pressure, eventually leading to the erosion of a friendship. But how exactly can money adversely affect your relationship with your friends over time?
Power Imbalance
‘When a significant financial disparity exists between two friends, it may eventually lead to a power imbalance,’ explains psychologist Manjula MK. ‘Perhaps one party is constantly paying for outings and gifts because they have access to more resources. They eventually take on the dominant role, making crucial decisions on what to do. Over time, this may fuel feelings of resentment within the other party, who feels he or she has to toe the line and go along with these decisions. Conversely, if they choose not to, the wealthier individual may feel like they’re being taken advantage of. Eventuall,y this power imbalance can take a toll on the relationship, leading to misunderstandings.’
Jealousy
Let’s face it, most of us relish the idea of luxuries such as travel, fine dining, fashion and beauty. When these delights are easily accessible to one friend and not to the other, solely on the basis of financial standing, it can spark jealousy in the lesser-affluent friend. This is especially compounded because of the presence of social media platforms, which magnify experiences. Envy can rear its ugly head, creating discord between friends.
Disparate Spending Habits
‘Let’s say one friend initiates a spa date,’ explains Manjula. ‘The other doesn’t have extra cash for such indulgences and wants to prioritise her home loan instead. She will eventually start making excuses to evade social situations that cause her embarrassment. Fearing feelings of judgement or pity, friends often avoid telling the truth in such circumstances. This lack of ability to pursue the same activities and interests can cause friends to drift apart and gravitate towards newer friends who share their similar lifestyles. It isn’t simply a result of how much cash each person has. It also has to do with how they choose to prioritise wealth.’
On the other hand, some friends may give in to peer pressure and spend more than they can afford. ‘If your friend gives you a designer bag for your birthday, you may also feel indebted to buy them something of a similar value, even if you cannot afford it,’ elaborates Manjula. ‘This comes with the risk of credit card debt, and feelings of bitterness and anxiety. It eventually erodes the joy out of a relationship.’
Exchange Of Money
It’s one thing for friends to let financial circumstances get in the way of their relationship. But what happens when financial transactions enter the fray? Borrowing from or lending money to a friend is a complex affair, especially since there is no strict code to enforce repayment. It is advisable to avoid such dealings, as they can cause the lender to feel vulnerable and the borrower to feel embarrassed. But if you have to get into it, set aside politeness and seek clarity – after all, there are no written agreements. Yes, it might be awkward, but it’s better than long-term resentment later on. Ask a few basic questions - is there interest involved or are there fixed repayment terms? What is the time frame for returning the money? Set down the terms, keeping some leeway for contingencies or windfalls.
Business Partnerships
Friends-turned-business partners are more vulnerable to money disagreements than any others. Right from investing capital to cutting expenses and paying salaries, decisions have to be taken together and agreed upon. All expenses and profits need to be disclosed in a transparent manner. If the business is going through bad times, you need to decide how to cover the losses together. How much compensation for work should each partner get? Does anyone feel shortchanged or undervalued? Is there any way to ensure funds are not mismanaged? Without a proper financial plan in place, your business – and friendship – may be at risk.
Solutions
Manjula MK provides a few basic solutions to navigate the minefield, which is money in a friendship.
1. Communication is the key, even though discussing money can be delicate and even taboo. Ensure that you are vocal with your friend about your spending habits and financial value system. Listen to what they have to say on the matter as well, and respect their views and any limitations they may have.
2. Set clear boundaries. If you’re not comfortable paying for something all the time, you shouldn’t have to. Similarly, if you feel awkward taking a financial favour that is difficult to repay, be honest about what you can participate in.
3. Be empathetic. Your friend has money, and they may want to spend it. Nothing wrong with that. Similarly, if you’re at the other end, be sensitive to your friend’s relative lack of resources.
4. Instead of trying to play tug of war, find common ground and engage in activities that you can both comfortably enjoy together.