How to deal with awkward money situations

awkward money situations

Sticky financial situations occur a lot between friends and it’s because Australians don’t like talking about money. In fact, most Aussies would rather talk about politics and religion than their own financial situations.

This lack of communication often results in a disconnect between how we handle our own money and how our friends expect us to, which can lead to a number of awkward situations…

We’ve picked out a handful of common money dilemmas encountered amongst friends and included some advice about how to tackle them without brushing anyone up the wrong way or making things awkward.

What should I do if my friends expect me to pay for everything because I earn more money than them?

This kind of situation happens a lot.

Firstly, it goes without saying that it’s wrong to expect someone else to pay more than their fair share of anything, because we all work hard for our money and we’re allowed to spend it however we choose. Secondly, you shouldn’t take advantage of your friends.

However, chances are they don’t know that you’re putting money away for a house deposit, saving for a car or keeping money tucked away for a holiday, probably because you haven’t told them, so they’re assuming you have significantly more discretionary spending power than you actually do. This is no excuse for the assumption that you’ll pay for them, but it might explain why it’s happening.

The best thing you can do in this situation is start a non-judgemental conversation about each person paying their own way. Let your friends know what you’re saving for, and why you can’t keep “picking up the tab”.

This might make them more comfortable to open up about their own financial woes and you can collectively decide how to continue enjoying each other’s company without the accompanying financial tension.

How do I tell my friend that they owe me money without making it awkward between us?

We’re all guilty of forgetting to pay our friends back occasionally, maybe it was for a late night pizza, or a ticket to a gig they didn’t chase us up about.

Sometimes, however, an innocent accident can turn into a habit that leaves us significantly out of pocket when we haven’t been reimbursed for a number of different things. And this is when things can start to get a bit awkward.

It can be hard to approach friends about money they owe us, particularly if we know their income isn’t as high as ours. But remember it’s not your responsibility to subsidise their lifestyle  or provide them a financial safety net.

The best thing you can do to get your money back without appearing judgemental or demanding is to explain firmly but emphatically that you need their debt repaid to stay on top of your finances.

This will either serve as a reminder that they owe you money, and they’ll be embarrassed that they’ve forgotten, or open  a discussion if they are experiencing money problems themselves.

If they can’t pay you back right now, you can discuss repayment alternatives such as payment plans, and perhaps point them toward a reputable service that can assist them in getting their financial house back in good order.

A family friend has asked for a loan, how do I say no to them without offending them?

The first thing to do in this situation is weigh up your own financial position. If you can’t afford to give them the loan – don’t do it. Explain to them that you’d love to help them out but you simply don’t have the funds do it. They should be understanding if this is the case because they won’t want to put you out.

If your financial situation might allow you to extend a loan, but you’re still not comfortable loaning your friend money, then simply explain to them that you’re not in the position to do so, they won’t know any different and it’ll spare them any offence.

One thing you can do to help them out without loaning them money, is giving them advice and steering them in the right direction.

If you’ve personally experienced the benefits of budgeting or building an emergency fund, share it with them. If you know of a great money management course, or how they could make some extra income from a side-gig  – hook them up. There’s a lot you can do for someone to help them out financially without being the source of money.

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Also published on Medium.