How To Talk About Money With Your Friends

Being open about savings goals creates accountability and support

 three friends sitting together in a coffee shop talking
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Many of us feel uncomfortable talking about personal topics like sex and relationships with our close friends, and the topic of money remains in that category of discomfort too. A 2018 survey by investment company Capital Group found that most Americans would rather talk about topics like politics, drug use, and racial issues, more than they would money. Women especially find financial topics, such as household earnings and retirement savings, to be off-limits, even among friends.

So where does this age-old taboo come from?

“Talking about money is inherently incredibly vulnerable, and oftentimes we don’t want to be vulnerable with people,” said Erin Lowry, founder of Broke Millennial and the author of several personal finance books, including “Broke Millennial Talks Money.”

While talking about money—even with your close friends—can feel uncomfortable or off-limits, it can help you to become more informed about financial topics, create accountability for your financial goals, or even just allow you to vent about something that’s causing you stress.

Keep reading to learn more about how to start talking about money with your friends, and why you should.

Starting the Money Conversation

One of the most difficult parts of talking about money with friends is simply getting started. But according to Lowry, most of us already talk about money with friends without realizing it. Topics like moving to a new apartment, wanting to buy something that’s out of your budget, or waiting to have another child until your first is in kindergarten are all money-centric conversations.

And according to Lowry, we can use these pain points as a way to start a deeper conversation around money.

“If you’re looking for an in on initiating a money-centric conversation, it doesn’t have to be, ‘How much is in your bank account? How much do you earn? What’s your debt situation?’” Lowry told The Balance in a phone call. “It could be looking for cues like, ‘I really wanted to buy this, but I can’t afford it.’ Or, I want to try this restaurant, but it’s kind of expensive.’”

Similarly, Rebecca Brooks, a financial coach and the owner of R&D Financial Coaching, recommends using an ice breaker of sorts to initiate difficult money conversations.

“If you want to start having conversations about money with your friends, start by asking them an interesting question that isn’t too direct, but can help you feel out how open they are to talking about it, like ‘If you could give one piece of financial advice to your past self, what would it be, and why?’” Brooks shared in an email to The Balance. 

Set Financial Boundaries

Often when discussing plans with friends, it’s common for someone to be calculating the financial burden in their head that will come from the plans. When this occurs or if it becomes a pattern, financial boundaries can be useful. 

A common example of this situation is when a friend suggests a restaurant or outing that’s out of your budget. Because of embarrassment or the fear of missing out (FOMO), we often end up spending more than we’re comfortable with. One Credit Karma survey found that nearly 40% of millennials have gone into debt to keep up with their peers.

If someone recommends something that’s out of your budget, Lowry recommends suggesting an alternative that fits within your budget. Providing context can be helpful as well. For example, Lowry states that you could share with your friend that you’re working on rebuilding your emergency fund, so rather than going out for an expensive dinner, you’d love to meet your friend for a drink before or after dinner.

Lowry emphasized the importance of suggesting an alternative rather than just saying no altogether, especially for friendships you really value.

“There’s a fundamental difference between saying no versus giving alternatives,” Lowry said. “If you say no enough times, people really do stop asking.”

And while it’s important to set financial boundaries of your own, it’s equally important to respect those boundaries your friends have put in place. Often as individuals make life changes, such as sharing finances with a partner, they may create new boundaries too.

Remember that everyone comes from different financial backgrounds and has their own unique experience. If you earn more than a friend or have more disposable income, for example, be cognizant of everyone’s financial boundaries when it comes to making plans together. If someone says they’re on a budget, respect that budget.

Turn to Your Friends as Resources

Financial literacy has declined over the past decade, according to a study by the Financial Industry Regulatory Authority (FINRA). In 2019, just 34% of FINRA’s survey respondents could answer at least four of five basic financial literacy questions, down from 42% 10 years earlier.

This data highlights the importance of normalizing money conversations with friends. Removing the taboo around talking about money can help individuals learn from their friends, rather than try to learn on their own.

According to Brooks, millennials and those in Generation Z (Gen Z) have made strides in destigmatizing money conversations. Social media platforms today are filled with financial educators specifically serving young people. These platforms can open the door for friends to learn about finances from one another.

If you have money questions or are struggling in a certain area, consider asking a more financially-savvy friend for advice or guidance.

“You could start by just asking the financial question, asking how they learned about money,” Lowry said. “They might say their mom taught them, and you can share that your parents never talked about money and ask if they can help you. Maybe they’ll point toward a book or a resource. It’s a way to ask without showing your hand or admitting that you don’t know.”

Set Financial Goals Together

Another way to incorporate money conversations into your relationships is to set financial goals together. Not only can emotional support go a long way, but you may actually be more likely to reach your goals when you share them with a friend.

In 2015, psychology professor Dr. Gail Matthews studied the effect of different strategies for reaching goals. In her research, she found that participants who created specific goals and action commitments for those goals—and sent them to a friend—were significantly more likely to reach their goals than those who didn’t. Participants who provided weekly progress reports to that friend were the most likely to reach their goal.

“The biggest benefit to talking about money with your friends and setting goals together is the ability to encourage one another to follow through,” Brooks said. “Financial goals are hard to reach—it takes time, sacrifice, and focus. Having someone to help you stay on track and stay focused on your goals will absolutely increase your odds of reaching them.”

If you aren’t comfortable sharing your goals with a friend, you can create a similar form of camaraderie and accountability by turning to the internet. Lowry suggests joining online groups and forums or following social accounts where you may feel more comfortable sharing information about your finances. 

If you do choose to set financial goals with your friends, it’s important to remember to check back on your progress and celebrate your achievements. Come up with ways that you can get together and celebrate financial success. For example, if one of your friends had a goal of saving enough to purchase a home before the year ends, and they reached it, you may consider treating yourselves to a dinner out, and continuing this tradition each time a friend meets their goals. 

Avoid the Comparison Trap

There’s no doubt that money can be a sensitive topic, and it’s easy to compare your situation to that of others. Comparison is even more difficult to avoid when one friend has a significantly better financial situation, such as a higher income or a lack of student loan debt.

“We are all on our own journey and the cards you are dealt are all completely different,” Brooks said. “Your socio-economic background, education level, career choice, and more all play a role in your financial picture and it is just as unique and intricate as you are.”

When you do feel comparison or doubt creeping in, Brooks suggests reminding yourself that it’s not always an apples-to-apples comparison. There are so many variables that make up our money story, some of which are outside of our own control.

It’s also important to remember that what you see on the outside isn’t often the full picture. Just because someone earns more or can buy nicer things doesn’t necessarily mean they’re better off in other areas. They could be spending above their means, or their larger income could be offset by financial responsibilities that you aren’t aware of.

And while it’s difficult to avoid comparison altogether, it’s important to make sure those feelings don’t turn into something unhealthy.

“Jealousy is normal, but it can also really destroy your relationship, and it’s not fair for you to resent them for something they can afford to do,” Lowry said.

Keep All Money Talk Judgement-Free

One of the reasons that talking about money can feel so difficult is because of the fear of judgment. As a result, it’s important to keep these conversations free of judgment on all sides. First, you deserve to talk honestly with your friends about finances without receiving judgment in return.

“You don’t know what you don’t know, and there is absolutely no shame in seeking the knowledge you know you are missing,” Brooks said. 

At the same time, it’s important to withhold judgment when friends choose to share with you. In situations where you and your friends are having very real money conversations, treat your friends with the same respect and lack of judgment you would want if the roles were reversed. Speaking in an open and honest manner can benefit both of you—financially and emotionally.

“There’s something very magical about having that kind of vulnerability when you can have open and honest money conversations, and there’s also a lot you can learn from each other,” Lowry said.

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