A large part of our lives is spent trying to maintain relationships with others. It doesn’t matter if it’s a friend or family member, relationships can be hard to sustain. A successful relationship requires care, love and attention in order to keep it growing. But what happens when you find yourself in a situation where that friend is putting a financial strain on you?
Friends who make you feel uncomfortable about money, or always seem to be after your money can be frustrating and can stop the relationship in its tracks. So what do you do about those people? Are they toxic and not worth having in your life? Not always, but being able to identify each person’s character can go a long way towards understanding how to deal with them.
There is a lot of information available about how to deal with friends when it comes to your money, and I’ve taken the opportunity to share some of what I’ve learned about it with you today. Below, I’ve listed a few of the “spending characteristics” of people and what I think is the best way to handle them.
Debt Birds will complain about the money they don’t have, but refuse to change any of their habits. They are obsessed with spending money and buying things they don’t need. When you’re out with Debt Birds, they usually want to do something spending related. Misery loves company, and it can be comfortable in a group where you and all of your friends are deeply in debt—you can all be broke together and gripe about how there is never enough money to do what you need, and then .
Debt Birds push each other further into debt by saying things like, “Wow, that looks good on you,” “You work so hard… you deserve to have it,” or “Buy it now… it’s on sale!” It’s crazy when you think about it, but people in debt are happiest when others are in their same condition.
Stay away from situations where you’ll be tempted by Debt Birds to spend your money on things you could otherwise do without. Instead of going to the mall, or meeting at a fancy bar for drinks, invite them over to your house and tell everybody it's . That way, you’re not spending a fortune on bar drinks and fancy food, but you’re still fellowshipping and building relationships with your friends.
The Guilt Tripper
The Guilt Tripper is the money-toxic friend who’s always plagued by financial issues and makes you feel guilty for spending on things you enjoy. For example, you’ve found a great deal on a cruise to Alaska for just $700, and thought it would be a nice getaway for you and your friends. Everybody is excited, but one of your friends (The Guilt Tripper) says, “Wow…that would be a nice trip, but all I have is $400, so I guess I can’t go.” Now you’re in a dilemma—where does that leave you? You can sacrifice a trip you were looking forward to or feel obligated to pay for your friend, which is exactly what they want. Instead of giving in, put the ball back in their court and suggest they choose a low cost alternative, come up with the additional funds, or simply ask them to wish you a bon voyage as you sail off to Alaska without them. After all, you can’t take on their money problems.
Economic Conspiracy Theorists
Economic Conspiracy Theorists are your friends who always want to blame the government for what’s going on. They are probably more dangerous to you than any of your other friends because they tend to speak as if they are very knowledgeable about the subject, and therefore, seem credible. They tend to say things like, “Obama did this, look at what happened to Wall Street,” or "Because of the Republicans, all the money is being sent overseas.” But if you ask them if they’ve ever read a book about personal finance or if they contribute to their 401(K), the answer would be “No.” For them, it’s all about passing the blame on someone else rather than taking control over their own finances.
The way to keep them from making you afraid that the sky is falling is to understand tax policy really doesn't affect your wallet at an everyday level. Say to them, “That's interesting… so what do you think that I should be doing with my money?” What you will realize is people usually have no idea what they're talking about when it comes to day-to-day money management. They're just ranting about something abstract to make themselves seem smarter than they really are. What I’ve noticed is that some “everyday people” will get wealthy no matter what the economy does—why not let that person be you?
The Big Spender is the friend who constantly brags about how much they've spent on things, and they will almost demand that you to keep up in order to be with them. You can’t have a simple, quiet evening out with this friend; it has to entail a five star restaurant, the most expensive drinks and the “best seat in the house.” You’ll end up going into debt just to maintain this relationship. The problem is—you’ll initially have so much fun hanging with this person that you’ll get sucked in.
You must refuse to get caught up in the same mentality as the Big Spender, especially when your finances say otherwise. If you want this person in your life, talk about things other than money and show your friend that elegance does not necessarily equate to breaking the bank. And don’t be afraid to tell your friend that although you like their company, you just can’t keep up in terms of their spending habits. A true friend will understand and want to be with you no matter what you are willing to spend on dinner.
The Faker is your friend that lives by the motto: “Fake it ‘til you make it.” These are the friends that will go into major debt for things that they absolutely cannot afford. The Fakers’ desire to have fancy things outweighs the sensible notion of creating a realistic financial goal to earn those coveted items. They care more about their image than the reality of their financial situation.
The Fakers are especially tricky to deal with; just like the Big Spender, they are a danger to associate with because it looks like they are having fun and living the dream. And because you probably know they are broke, you can become envious of their situation and try to “keep up with the Jones’” at your own financial peril. Pretty soon you will be living beyond your means as you try to keep up with your friend, or even worse, buy into their budget philosophy. Creating a false image of success can be misleading to everyone involved because more times than not, you’ll be exposed for the fake that you are.
The Champion is the friend who never seems to lose, or at least that’s what they want you to believe. They will talk about all the great investments and all the great financial decisions they’ve made. The Champion can be toxic because they’ll make you feel like a loser. The truth is, they are only telling you about the good that’s happened—they chose to omit the truth about the many failures they’ve had and the money they’ve lost “playing” the market.
Stay focused and don’t get caught-up in their world. You have a financial game plan and it’s best to stick with it. Don’t make any rash decisions based solely on the success “stories” this friend is telling you. As long as you’re living with no debt, investing 15% of your income in your 401(k), IRA, and accumulating 3-6 months of your income in an emergency fund, you’ll be very well off and can feel like a champion too.