Money Talks: Getting real about finances with friends who earn more than you

November 03, 2023

To keep your friendship alive — and avoid going into debt — have an honest conversation about establishing money rules you both can live with.

If you’re overspending to keep up with your friends, you’re not alone. In fact, one survey found that almost 40% of millennials have gone into debt trying to match their peers.

The problem isn’t restricted to the younger generations or any particular income level, says Kate Dorman, a clinical social worker, financial therapist and owner of Sound Financial Therapy in Seattle. “I hear about this issue from clients who make $50,000 and clients who make $200,000,” she says.

The internet has changed how people compare their financial lives to others. While in years past, you might have been tempted to redecorate after seeing a neighbor buy new furniture, “now, people compare their reality to a construct on social media,” Dorman says. “But what that person’s reality is, you don’t know.”

Whether you’re blowing your budget by splitting dinner bills or reciprocating over-the-top kids’ playdates, follow these tips to keep money tensions from creating a rift in your friendship.

Acknowledge the toll on your emotions

Overspending to keep up with friends isn’t sustainable, either financially or emotionally. At first, you’re likely to feel unsatisfied because you’re not spending money in a way that’s aligned with your goals and priorities, says Dorman. Over time, bigger problems could develop. 

“You can end up in a shame spiral. You overspend, and then you feel bad, and since you feel bad, you spend more money,” says Caroline Wessling, an associate marriage and family therapist based in the San Francisco Bay Area. If the spending keeps rising, you can end up in debt or even declaring bankruptcy, she adds.

Examine your money assumptions

Before you broach the topic with your friends, take some time to think about your own beliefs about money and whether they could impact the conversation, Wessling suggests. For example, do you believe that talking about money only leads to arguments?

Also, consider the role you play in your overspending. For example, is spending how you show someone you care? If you aren’t clear about your own money beliefs, you may not truly be open to what your friend has to say.

Emphasize the importance of your friendship

Breaking the cycle of overspending starts by breaking the ice with your friend. Let them know you treasure the relationship and the time you spend together.

Dorman recommends starting with, “I’ve been thinking a lot lately about my finances, and I’ve been feeling stressed that I don’t earn as much as you. I really value your friendship, and I’d appreciate it if we could spend some time together without spending money. That would really help alleviate some of my stress and allow me to enjoy spending money together when we do decide to do that.”

Recognize that the conversation could be awkward

Wessling suggests openly acknowledging that the discussion might not be easy. “You can say, ‘I know this is awkward, but I've been struggling a bit lately with my spending. I wanted to talk to

you about that and how it’s affecting our friendship. Are you open to having a conversation?’”

Don’t feel like you must settle everything in one sitting. If a topic you weren’t expecting comes up, or either of you start to feel uncomfortable, you can always take a break and resume the conversation later. 

Use “I” statements to avoid placing blame

Instead of commenting on your friend’s behavior, let them know how you’ve been feeling. For example, Wessling suggests saying, “I’ve noticed I'm not sticking to my financial goals lately. I want to reduce the amount I'm spending on going out.” Avoid saying, “You always want to do high-cost activities, and you don’t seem to care how that affects me.”

Dorman has another caution: Don’t make assumptions about your friend’s financial situation, blame your friend for making more than you do or criticize them for how they spend their money.

Look for a win-win solution

Be willing to listen to the other person’s perspective and present a solution if you feel comfortable doing so, Dorman advises. However, don’t give up on your own boundaries if your friend doesn’t listen or understand. For example, if your friend continues to ask you to do high-cost activities after the conversation, Wessling suggests a simple response like “That sounds like a lot of fun, but it’s not in my financial plan. Would you like to meet up for a coffee?”

Be prepared for the unexpected

Be open to all the ways the conversation could turn out. For example, your higher-income friend might offer to pay for meals, activities, or travel for you. Would you be comfortable with that? Or your friend might be stressed about their own spending. How will you respond?

Even though you may feel apprehensive about having a conversation like this, there’s no reason to expect the worst, says Wessling. “You will probably be surprised to find out just how much other people are feeling the same way as you,” she says. “A lot of people have a lot of anxiety about money and feel this same pressure to spend and keep up with others. You could very easily find that people are relieved to hear you put it out into the open, and you could actually end up supporting each other to reduce your spending and be more mindful.”

Watch this video for tips on how mindful spending can keep you and your money on track.

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Growing your savings by going on a ‘money hunt’

Working with an accountability partner can help you reach your goals

The banking app you need as a new parent

Why a mobile banking app is a ‘must have’ for your next vacation

How to decide when to shop local and when to shop online

A who’s who at your local bank

Webinar: 5 myths about emergency funds

How I did it: Learned to budget as a single mom

Your guide to starting a job: Resources to help along the way

Your 5-step guide to financial planning

How to set yourself up for success in your first job

5 myths about emergency funds

Financial Wellness Assessment

How to stay positive when searching for a job

Banking basics: How to start saving

Webinar: Common budget mistakes (and how to avoid them)

Does your savings plan match your lifestyle?

Mobile banking tips for smarter and safer online banking

Uncover the cost: Wedding

Uncover the cost: International trip

What military service taught me about money management

Are savings bonds still a thing?

Tips to overcome three common savings hurdles

Booming in the gig economy: A new chapter leveraging 45 years of experience

Adulting 101: How to make a budget plan

How having savings gives you peace of mind

Helpful tips for safe and smart charitable giving

Personal loans first-timer's guide: 7 questions to ask

3 awkward situations Zelle can help avoid

Allowance basics for parents and kids

What’s your financial IQ? Game-night edition

Mindset Matters: How to practice mindful spending

How and when to ask for a raise

How to save money while helping the environment

How to choose the right rewards credit card for you

How can I help my student manage money?

Steer clear of overdrafts to your checking account

How to manage money in the military: A veteran weighs in

Things to know about the Servicemembers Civil Relief Act

You can take these 18 budgeting tips straight to the bank

3 tips for saving money easily

Save time and money with automatic bill pay

How to best handle unexpected expenses

Common unexpected expenses and three ways to pay for them

Stay on budget — and on the go — with a mobile banking app

Which is better: Combining bank accounts before marriage — or after?

Do you and your fiancé have compatible financial goals?

U.S. Bank asks: Transitioning out of college life? What’s next?

U.S. Bank asks: Do you know your finances?

U.S. Bank asks: Do you know what an overdraft is?

Personal finance for teens can empower your child

Is it time to get a shared bank account with your partner?

It's possible: 7 tips for breaking the spending cycle

How to save for a wedding

How can you pay bills online the right way?

Here’s how to create a budget for yourself

Don’t underestimate the importance of balancing your checking account

9 simple ways to save

7 steps to prepare for the high cost of child care

A passion for fashion: How this student works the gig economy

Earning in the gig economy: Gladys shares her story

By the numbers: The gig economy

Tips for working in the gig economy

How compound interest works

Dear Money Mentor: How do I set and track financial goals?

5 tips for parents opening a bank account for kids

5 reasons why couples may have separate bank accounts

Checking and savings smarts: Make your accounts work harder for you

Lost job finance tips: What to do when you lose your job

Money Moments: 3 smart financial strategies when caring for aging parents

Tips to raise financially healthy kids at every age

Money management guide to financial independence

First-timer’s guide to savings account alternatives

Money Moments: 8 dos and don’ts for saving money in your 30s

7 financial questions to consider when changing jobs

Tips and resources to help in the aftermath of a natural disaster

Myths vs. facts about savings account interest rates

30-day adulting challenge: Financial wellness tasks to complete in a month

5 tips to use your credit card wisely and steer clear of debt

Travel for less: Smart (not cheap) ways to spend less on your next trip

Money Moments: How to manage your finances after a divorce

Money Moments: 3 tips for planning an extended leave of absence

Overdrafts happen: Steps to get you back on track

What’s in your emergency fund?

Certificates of deposit: How they work to grow your money

P2P payments make it easier to split the tab

Essential financial resources and protections for military families

What you need to know about renting

Dear Money Mentor: How do I pick a savings or checking account?

Real world advice: How parents are teaching their kids about money

How to stop living paycheck to paycheck post-pay increase

Practical money tips we've learned from our dads

6 ways to spring clean your finances and save money year-round

Meet the student with a passion for science, helping others and reaching goals

What I learned from my mom about money

How to cut mindless spending: real tips from real people

Understanding guardianship and power of attorney in banking

How to increase your savings

Bank from home with these digital features

What financial advice would you give your younger self?

Military finance: How to create a family budget after military service

Managing money as a military spouse during deployment

How I saved $10,000 in just one year

Discovering your money personality can help you save

Tips on how couples can learn to agree about money

Your guide to smart money habits

Understanding your military GI Bill benefits

Webinar: How to pay for college

How grandparents can contribute to college funds instead of buying gifts

How to open and invest in a 529 plan

Using 529 plans for K-12 tuition

Your financial aid guide: What are your options?

Is a home equity loan for college the right choice for your student

Parent checklist: Preparing for college

How to apply for federal student aid through the FAFSA

What to consider before taking out a student loan

How I did it: Dug my way out of a five-figure student loan debt

Are you ready to restart your federal student loan payments?

Consolidating debts: Pros and cons to keep in mind

How to talk to your lender about debt

Which debt management technique is right for you?

Everything you need to know about consolidating debts

Managing debt

Best travel credit card perks for family vacations

5 tips to use your credit card wisely and steer clear of debt

5 steps to selecting your first credit card

How to use debt to build wealth

What’s a subordination agreement, and why does it matter?

Understanding the true cost of borrowing: What is amortization, and why does it matter?

7 steps to keep your personal and business finances separate

Know your debt-to-income ratio

How to pay off credit card debt

How to use credit cards wisely for a vacation budget

Your quick guide to loans and obtaining credit

Dear Money Mentor: How do I begin paying off credit card debt?

Checklist: 10 things to look for when touring a home

How to sell and buy a home at the same time

Mortgages after retirement: Here’s what to know

Dear Money Mentor: What is cash-out refinancing and is it right for you?

Home improvements with the best ROI

Overcoming high interest rates: Getting your homeownership goals back on track

How we did it: Converted to solar power

Is it cheaper to build or buy a house

PCS moving checklist for military spouses and families

For today's homebuyers, time and money are everything

Crypto + Homebuying: Impacts on the real estate market

Should you buy a house that’s still under construction?

How I did it: Bought my dream home using equity

Buying a home Q&A: What made three homeowners fall in love with their new home

House Hacks: How buying an investment property worked as my first home

Starting your homebuying journey

Managing the impacts of appraisal gaps in a hot housing market

How I did it: Built living spaces to support my family

Spring cleaning checklist for your home: 5 budget-boosting tasks

Bringing economic opportunity to underserved communities one home at a time

Community activist achieves dream of homeownership

Saving for a down payment: Where should I keep my money?

Your guide to breaking the rental cycle

DIY home projects 101: tips from a first-timer

Checklist: 6 to-dos for after a move

What are conforming loan limits and why are they increasing

Military homeownership: Your guide to resources, financing and more

Uncover the cost: Building a home

How I did it: Bought a home without a 20 percent down payment

The lowdown on 6 myths about buying a home

Home buying myths: Realities of owning a home

4 ways to free up your budget (and your life) with a smaller home

Get more home for your money with these tips

Money Moments: Tips for selling your home

Money Moments: How to finance a home addition

How I did it: My house remodel

Are professional movers worth the cost?

First-time homebuyer’s guide to getting a mortgage

Dear Money Mentor: When should I refinance a mortgage?

Beyond the mortgage: Other costs for homeowners

Quiz: How prepared are you to buy a home?

What is a mortgage?

Building a dream home that fits your life

10 ways to increase your home’s curb appeal

10 questions to ask when hiring a contractor

5 things to avoid that can devalue your home

How you can take advantage of low mortgage rates

What is an escrow account? Do I have one?

Is it the right time to refinance your mortgage?

What to know when buying a home with your significant other

What is refinancing a mortgage?

These small home improvement projects offer big returns on investment

Should you get a home equity loan or a home equity line of credit?

Mortgage basics: What’s the difference between interest rate and annual percentage rate?

Mortgage basics: What is refinancing, and is it right for you?

Mortgage basics: Prequalification or pre-approval – What do I need?

Mortgage basics: How much house can you afford?

Mortgage basics: How does your credit score impact the homebuying experience?

Mortgage basics: Finding the right home loan for you

Mortgage basics: Buying or renting – What’s right for you?

Mortgage basics: 3 key steps in the homebuying process

Is a home equity line of credit (HELOC) right for you?

How to use your home equity to finance home improvements

How does a home equity line of credit (HELOC) work?

How do I prequalify for a mortgage?

Home equity: Small ways to improve the value of your home

Can you take advantage of the dead equity in your home?

8 steps to take before you buy a home

6 questions to ask before buying a new home

4 questions to ask before you buy an investment property

10 uses for a home equity loan

Uncover the cost: Home renovation

How to request a credit limit increase

What applying for store credit card on impulse could mean

Improving your credit score: Truth and myths revealed

How to spot a credit repair scam

6 essential credit report terms to know

5 unique ways to take your credit card benefits further

How to maximize your credit card rewards

Myth vs. truth: What affects your credit score?

Test your loan savvy

Decoding credit: Understanding the 5 C’s

Credit: Do you understand it?

How to build and maintain a solid credit history and score

Should you give your child a college credit card?

U.S. Bank asks: What do you know about credit?

What types of credit scores qualify for a mortgage?

What is a good credit score?

Credit score help: Repairing a bad credit score

How to improve your credit score

Common questions about electric vehicles (EVs)

What to keep in mind when buying a used car from a private seller

I own two electric vehicles. Here’s what I’ve learned about buying and driving EVs.

How I decided that buying an RV was worth it for me

Car shopping: Buying versus leasing your next vehicle

Take the stress out of buying your teen a car

How to winterize your vehicle

Questions to ask before buying a car

What you should know about buying a car

When to and benefits of refinancing a car loan

How to choose the best car loan for you

What you need to know before buying a new or used car

Disclosures

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Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.