Money and Friendship: Managing Wealth Differences

by TTMK on March 17, 2014 · 16 comments

money and friendshipPersonally, I don’t care what someone’s income or wealth is when I develop a friendship with the person.  It doesn’t factor into the equation directly, as it’s more about other things to me.  Such as, do I laugh and have fun around the person, and do I find him or her trustworthy and of good character.

Nevertheless, sometimes money differences can come into play.  For me, while I don’t think about the person’s finances when forming friendships, money can impact things later.  Let me explain below.

I have a friend who I’ve known for a long time, for over 20 years actually.  We both were once kids coming from the same kind of middle-class background, and ultimately obtained similar levels of education.   We had a lot in common, and enjoyed a lot of the same activities. Fast forward to today.  Now, life is busier, with families and other aspects of life keeping us busy.  So naturally, there is less time to hang out due to other priorities.  Not to mention we have each have our own set of friends who we spend time with as well.  Just a part of getting older, really.

However, even with the limited time I have, I don’t see this friend as much anymore.  Some of it, frankly, is that he has earned a significantly greater amount of money than I have.  Not that I’ve done poorly, but he’s really seen his career skyrocket – along with his wife’s career, in particular.  They’re collectively doing very well and have made some great investments too.  He’s a straight shooter, so there is very little chance that he’s exaggerating anything.

They take – along with their kids – exotic trips to different parts of the globe.  They’re taking beach vacations and skiing trips too.  Private sports lessons for their kids.  The house and neighborhood in which they live is very nice, and it’s probably not a stretch for them either.  In short, they live a sweet life because they can truly afford it.

Now, in my household, we do things much more frugally.  Part of this is my nature, but it’s mostly due to the need to focus on actual needs first.  You know, household expenses, retirement, college, etc.

To be clear, I don’t begrudge any friends for succeeding and I truly wish for the best success for each and every person with whom I’m close.  It makes me happy to see others successful and happy. That being said, it does give us less in common.  For example, while I’ve traveled a fair amount (47 of 50 states), I simply can’t travel much at all today due to family needs and being smarter about allocating resources.  My home is not at the level as theirs.

This gives us a few less things to talk about, and a different perspective on money now.  We were talking about someone he knew who got an inheritance of around $200,000 and was happy about it.  He then commented that $200,000 was “chicken feed” and wasn’t a game changer for anyone.

Now, I think that for many people that’s a pretty decent amount of money to add to one’s net worth.  There are a shocking number of people with very little saved, and one article I saw recently noted that well over half of workers have less than $50,000 saved.  But this guy thinks $200,000 is nothing.  He never would have said that a decade ago.

When you start having different tastes due to money, different activities due to resource considerations, it can mean you start to have less in common.

Here are 3 ways to avoid letting wealth or income differences get in the way of friendships:

1) Focus on what you do have in common

While some things may have changed with a growing gap in financial means between friends, there must have been some things in common that brought you together in the first place.  Maybe it was a favorite sports team, memories from school, or something similar that just hasn’t changed.

2) Accept that different people have different worldviews

The way we look at things can evolve over time.  Because someone views something different from how we do doesn’t automatically make them wrong.  Maybe we can broaden our horizons and learn something new?

3) Be happy for their success, or be empathetic toward their struggles

If your long-time friend is now achieving some incredible financial success, be happy for him or her! No need to get jealous, at least not too much 🙂  If your friend is struggling, please try not to dismiss them or lose interest.  Rather, have empathy for their situation and realize that money doesn’t matter more than people.

My Questions for You

Do you have any friends whose finances are quite different from yours?

Has this been a longtime difference, or is it a difference that has evolved over time?

How do you manage things with friends who have different means?

{ 16 comments… read them below or add one }

Kay March 17, 2014 at 9:45 am

It is tough sometimes when friends have different spending habits in particular. We also live more frugally, but have friends who do not. Sometimes they make comments about this even though it is not something we bring up. We definitely just try to focus on what we do have in common.

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TTMK March 21, 2014 at 4:17 pm

That’s interesting that they bring up your frugal lifestyle even though you guys don’t bring it up. That’s okay, you have to do what best suits you even if others don’t understand!

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Mr. Utopia @ Personal Finance Utopia March 17, 2014 at 4:32 pm

My wife and I don’t have any friends who are that much “out of the ballpark” compared to us, but I can definitely envision how income/wealth gaps could create a rift between friends. I think one key is how far your relationship goes back and how close you were to begin with. I do think it can be very difficult to make new friendships with someone quite a bit out of your socioeconomic class.

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TTMK March 21, 2014 at 4:16 pm

True, if you can become friends first when in similar places in life it can make things easier. Building that bond when you have less in common and have more/less expensive tastes can be tougher (though not impossible).

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Kasia March 18, 2014 at 4:49 am

Money and friendship is a problem when you make it a problem and that can come from either party. I have friends from different walks of life, different careers and incomes. It’s important to use common sense when spending time together and like you say, focus on what you have in common. Don’t boast about how well you’re doing with friends who might be struggling and don’t talk about your debts and financial woes to your wealthier friends (unless their a financial planner and you want some advice).
Unfortunately, some people change in a negative way when they become wealthy, they put themselves up on a pedestal. Once that happens, they’re generally not worth your time and it’s a good idea to find some new friends.

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TTMK March 21, 2014 at 4:14 pm

I agree, the focusing on what you have in common aspect is important. And you have a really good point that resonates: if someone changes for the negative and puts themselves on a pedestal, it’s time to move on from them at least to a large degree.

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Peter H. March 19, 2014 at 4:33 pm

Rule of thumb is to never lend money to your friend, but just give. I’ve lend money to my friends before and when they can’t pay me back, they give me the stiff arm.

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TTMK March 21, 2014 at 4:13 pm

The stiff arm is a good move for a running back in football, but not so much for a friend 🙂

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DEBt DEBs March 19, 2014 at 6:05 pm

I try to get ideas from friends who have better financial situations than mine. Usually I find the ones who are doing quite well are actually quite frugal. The ones who behave (aka spend) like they are doing really well also have a lot of debt. Don’t try to keep up with the Joneses people! 😉

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TTMK March 21, 2014 at 4:12 pm

Yes, it’s funny how that sometimes works!

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Daisy March 20, 2014 at 2:20 pm

I do have friends that are in very different financial situations than I am. Some are in better situations and some in worse. We try to find a common ground and we do inexpensive things together regardless of the financial situation. We don’t know the whole picture of anyone’s situation so I don’t want to assume.

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TTMK March 21, 2014 at 4:12 pm

That’s key, finding common ground and going from there. Probably important in many aspects of life, actually.

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The Thrifty Issue March 20, 2014 at 8:43 pm

I have a variety of friends in different financial circumstances to my own, but I don’t worry or compare. We still have plenty to talk about. Some I made friends with when they were already wealthy, others we grew up together and I have out earned them or vice versa. I can see it being an issue for some, but it hasn’t been for me.

I am friends with people because I like them and I also know at times friendships fall by the wayside and that is ok. If a friendship is forced, I don’t really want it.

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TTMK March 21, 2014 at 4:11 pm

Totally agree, be friends because you like each other not because it’s forced.

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Little House March 21, 2014 at 8:40 am

We have friends from varying backgrounds and income levels and it isn’t an issue. But I think it’s because we have other things in common and enjoy their company. Perhaps if there were activities that they could afford that we couldn’t (or vice versa), then maybe it would be a problem, but for the most part, money doesn’t factor into our friendship.

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TTMK March 21, 2014 at 4:10 pm

That’s good that you guys haven’t had this be an issue either way. Good point about the affording common activities aspect of things.

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