Earning less than your friends sucks – in just about every way. Let’s be real: you don’t want to be seen as a failure. You also don’t want your friends to look down on you for saying “no” to dinner invites.
At the same time, it’s important to keep your friendships, dignity, and budget intact. We get it.
If you’ve ever felt anxious about evenly splitting the bill at a restaurant or bummed out about declining an invite for a group trip, you’re not alone. Nearly half of Generation Z and Millennials have felt strain in their friendships due to money.
Here’s the good news. It doesn’t have to be this way.
Luckily, you’re not doomed to being the “poor” friend. With a few mindset changes, you’ll feel better about yourself and your friendships. To make things even easier, we reached out to money experts to help boost your self-esteem and keep your budget intact.
Take a look.
Leave Jealousy Behind
You don’t need to keep up with the Joneses’.
In fact, that friend who is earning six figures might actually be jealous of you. No matter which way you look at it, comparing yourself to others is a losing game because everyone has different strengths and weaknesses, just like every job has pros and cons.
“Everyone has a different calling in life and there are pros and cons associated with each profession. Some people get a high salary, but no work-life balance or low job security. Others may have a lower salary but better work-life balance,” explains Kaya Ladejobi a CFP at Earn Into Wealth Strategies.
Jealousy is a waste of energy. A better use of time? Set boundaries, accept your financial limitations, and make a financial plan that works for you. Here’s how to get started in three easy steps:
Step #1: Create your budget.
Step #2: Stick to your budget and grow your emergency fund.
Step #3: Don’t worry about the rest.
Don’t Expect Your Friends to Pay
The quickest way to ruin a friendship? Expect your high-earning friends to foot your bill without paying them back. The reason for this may surprise you: over time, you’ll begin to dislike your generous friends.
According to a study from the Journal of Personality and Social Psychology, video game players disliked playing team games with overly generous players even more than selfish players. The reason? The over-the-top generous players made the other players feel (and look) bad.
If you don’t think you’ll feel bad about free meals or activities, imagine this: how would you feel if your friend always paid for you when out to dinner with a group? It might feel nice at first, but after the third or fourth time, you’d probably feel uncomfortable and even wonder what other people thought of you.
Luckily, the fix is easy. Don’t expect your friends to pay.
Learn to Say “No”
It’s okay if something doesn’t fit in your budget and it’s also okay to say “no.” While it can be difficult to decline fun activities with friends, there’s a much more painful alternative: overspending and blowing your budget.
“Whatever you do, don’t try to keep up with your friends by putting the cost on a credit card. You may end up paying for a fun night out for months or years, plus interest,” says Eric Rosenberg, personal finance expert and author of Personal Profitability.
Even though it may feel awkward at first, saying “no,” may be your best bet. If you’re feeling brave, you can even explain why you’re opting out.
“I’ve had many financial planning clients with modest incomes who were very frugal and even called ‘cheap’ by their friend. But they had very healthy net worths due to their frugal spending,” says Sean Allen, financial advisor at WizeFi.
Besides, says Allen, “Because their friends knew their ‘cheap’ behavior was intentional, it was respected. Let your friends know you’re going on a spending diet to build up your productive assets. You might be surprised by some that follow your lead.”
If an activity or outing doesn’t fit in your budget, politely decline and move on. Remember: there’s no shame in saying “no” and living within your means.
The best way to avoid awkward money moments? Plan activities that fit in your budget.
There are endless ways to hang out on the cheap or even for free. Better yet, if you take control of the plans, you can also take control of the costs.
“As the friend with a tighter budget, be on the prowl for fun, low-cost events in your area like free concerts and festivals. Art fairs and flea markets can be fun too. And don’t forget the great outdoors! Hiking, camping, and urban exploring are all fun adventures that cost nothing more than food and transportation if you have the right gear,” says Rosenberg.
The good news for your friends? They don’t have to plan the activity and they get to save extra money. It’s the ultimate win-win.
Know Your Worth
At the end of the day, remember that your salary doesn’t define you or your friendships. You are every bit as worthy and important as your friends who earn more.
“You need to know that your value is not how much you earn and that your friends care about you for who you are and not how big (or small) your bank account is,” says Debbie Todd, CPA, and CEO at iCompass Compliance Solutions, LLC and 1 Hour Impact.