Money is a deeply personal topic. But by keeping our finances under wraps from friends, we may be missing out on valuable advice, deeper relationships, and new perspectives.
“Having a friend or a group of friends that you can talk to about money can radically shift your relationship with it,” says Grant Sabatier, author of Financial Freedom and creator of Millennial Money. “The more you think about money and talk about money, the more comfortable that you get with it.”
Here are some helpful tips on how to start the conversation, set boundaries, and help one another toward financial independence.
Key Takeaways
- Discussing money with friends can help you build stronger relationships and foster financial well-being.
- Creating a safe and judgment-free environment is crucial for open and honest money conversations.
- Starting the conversation with interesting and indirect questions can help break the ice and encourage participation.
- Setting boundaries and expectations can prevent conflicts and ensure productive discussions.
- Seeking educational resources and working with financial advisors and financial therapists can enhance your financial journey.
How to Start the Conversation
Before deciding what you want to talk about, you will want to determine who you want to talk with.
Casually incorporating personal finance topics into your conversations with friends can help you figure out which friends share your financial values and what tone you want the conversation to have. Here are some questions to open the conversation without getting into the nitty-gritty:
- Are you more of a spender or a saver?
- What’s more worth it: an experience or an item?
- Can money buy happiness?
For me and many of my college-aged friends, investing in a Roth individual retirement account (Roth IRA), opening a high-yield savings account, or amassing a strong credit score are points of pride. As Sabatier suggests, speaking with friends in similar financial situations to your own helps you relate to one another without a sense of competition.
“Talking with people who were in the exact same situation as me about money was very, very effective,” Sabatier says. “It’s being on a life journey with someone else who’s where you’re at.”
How to Create a Judgment-Free Environment
Creating a safe and judgment-free environment is key to having constructive conversations and building relationships with your friends. Here are some tips for setting the tone and building trust.
Set Ground Rules
Before you jump into a conversation, some financial experts advise setting ground rules and objectives. Here are some sample rules that I have used with my friends:
- Keep the conversation confidential
- Speak using “I” statements
- Actively listen without interrupting
- Do not pass judgment
- Avoid comparisons
This step may feel overly formal, but it can help define the conversation’s terms and avoid later discomfort.
Lead by Example
Sabatier says that by embodying the tone that you want the conversation to take, your friends will be able to pick up on your language and demeanor to support a constructive conversation.
Especially if you’re initiating the conversation, you may need to demonstrate to your friends that an easy and comfortable money chat is achievable in the first place. Imagine if one of your friends approached you to discuss personal finance, and they immediately began passing judgments on your expenses, insisting that you use the same budget tracker that they do, or complaining about their own financial situation (which you know is more stable than your own). That would be horrible!
Modeling practices can help you avoid these situations and lay a foundation for success.
Adopt a Growth Mindset
You have a whole financial future ahead of you, and nothing is set in stone. Your financial situation will likely ebb and flow throughout your life, and centering growth and positivity in conversations with friends can improve your mindset and help you cultivate stronger financial relationships with your friends.
According to Kristin Wong, author of Get Money, a financial freedom guide for young people, confiding in friends about financial situations can be very helpful and reassuring.
“It can be really hard not to internalize our money challenges and see them as personal shortcomings,” Wong says. “Talking about those issues openly with a friend can make you feel a little less alone. Most of us have been there, and there’s a good chance your friends have, too.”
Set Boundaries and Expectations
The greatest risk when discussing money with friends is that the conversation becomes uncomfortable, and it jeopardizes your friendship. According to Sabatier and Wong, setting expectations and boundaries for money conversations can stop this problem at the root.
Personally, my precise account balances are off-limits to friends. Some of my friends are uncomfortable speaking about their financial support from their parents, and other friends choose not to talk about their college financial aid packages.
We each have different preferences, and being upfront about them can benefit your relationships in the long run.
“You can still have a candid conversation about money without sharing the nitty-gritty details of your financial life,” Wong says. “If you’re talking to the right person, you should feel comfortable setting boundaries on specific details, like your income or debt amounts, to maintain privacy and prevent any potential discomfort.”
Tip
If you do run into issues with navigating sensitive topics, it’s best to tackle any miscommunication or discomfort head-on. Some conflicts may represent a flaw in your approach to financial conversations with friends, and they could be signs to reevaluate boundaries or limits on advice.
Set Financial Goals Together
Setting financial goals with your friends can keep you motivated and improve your financial literacy. According to Wong, by sharing financial successes and failures, you can better evaluate your financial strategies.
“Friends in the same age group often face similar financial challenges: student loans, entry-level salaries, budget constraints, and so on,” Wong says. “Most young adults have a shared understanding of what it is to struggle financially, so you can create a community that fosters financial literacy and cheers each other on when it comes to financial goals.”
Address Differences in Financial Situations
When you’re in college, you and your friends all live in the same dorms and eat the same dining hall food, but when you’re in the real world, financial disparities between you and your friends will probably become more obvious—especially as you embark on different career paths.
It’s certainly not impossible to navigate money conversations with friends in different financial situations, especially if you share the same values. However, you should address financial differences head-on and approach these conversations intentionally, to prevent feelings of pity or resentment.
“You really have to come to it from a place of love, and respect, and understanding. Try to put yourself in the person’s shoes that you’re talking with, and recognize how you talk about money will make them feel,” Sabatier says. “If you have more money than them, often talking with someone who doesn’t have as much money can come off as bragging or make them feel bad because they’re not in this similar position.”
Seek Professional Help If Needed
While speaking about money with friends can be very helpful, these relationships have their limits, and you may want or need additional support from a financial advisor or educational source.
“You can get valuable insight from friends while also seeking help from a professional,” Wong says. “It’s like going to a therapist, right? A good therapist is going to help you process whatever you’re going through, but your friends can be there for you, too.”
Here are some helpful resources for finding a financial planner:
Tip
Of course, hiring a financial advisor may not be financially realistic for many young people. According to Wong, older friends or colleagues can be helpful resources. You can also look into robo-advisor programs, which can help you manage your money for much less than a traditional financial advisor.
As Sabatier notes, a financial advisor can be very helpful, but you should always try to do your own research before seeking out a professional.
“Unfortunately, the financial industry is so predatory, and it’s really built around exploiting people and exploiting what they don’t know,” Sabatier says. “So if you know a little bit, you’re not gonna get scammed or the likelihood is gonna be a lot less, and you’re gonna be able to ask better questions for yourself.”
Here are some resources for self-education:
- Investopedia’s Financial Literacy Resource Center
- Consumer Financial Protection Bureau
- National Endowment for Financial Education
How Do You Start a Conversation Asking for Money?
Asking for money can be hard and often embarrassing. If you want to ask a friend or family member, it is important to approach the matter seriously, being direct and honest. You should explain why you need the money, provide a clear timeline for repayment, and thank the person for hearing you out.
Still, some experts in financial planning for young adults warn against lending or borrowing from friends and family.
“I think it’s probably best to avoid co-signing or lending money to friends because it has the potential to ruin friendships, and our friendships are more important than money,” Wong says.
Can a Friend or Family Member Help Me with Bill Paying and Banking?
You can ask a friend or family member to help you with bill paying and banking, but you should know that this move could come with uncomfortable consequences or power imbalances in your personal relationships.
If you have already decided that you want to ask a friend or family member for help with bill paying and banking, you have both formal and informal options.
Informal loans could involve your close friend cutting you a check with an informal agreement that you will pay the money back in a set amount of time.
More formal options could include a convenience account that allows you to designate a person to help you with depositing, withdrawing, and writing checks. Alternatively, adding a friend or family member to your account as a trusted contact would notify that person if your bank suspects a financial scam, and granting a person close to you power of attorney would give them the ability to act on your behalf regarding your finances.
Who Is the Best Person to Talk to About Finances?
While there is no “best” person to talk to about finances, some financial experts say that you may find it helpful to consult your friends and family about personal finance questions. Given that these people are deeply familiar with your values and character, they may be able to provide you with more candid and personalized advice than a financial advisor or therapist.
Regardless of who you talk to about your personal finances, you should make an effort to educate yourself on different financial products and services before entering into a conversation. Resources like Investopedia’s Financial Literacy Resource Center, the Consumer Financial Protection Bureau, and the National Endowment for Financial Education provide foundational finance knowledge, so you can know your options and control your money.
The Bottom Line
Friends can be a great resource for personal finance matters. However, it’s essential to recognize the importance of establishing clear boundaries and expectations when engaging in financial discussions with friends. By openly communicating personal preferences and boundaries, you can foster healthier relationships and avoid potential discomfort or misunderstandings.
Beyond friends, you may want to seek professional guidance from financial advisors and external financial education resources. Ultimately, by navigating financial discussions with friends sensitively, you can strengthen your friendships while enhancing your financial well-being.
