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A Trusted Friend in a Complicated World

What to Do When Your Friends Make More (or Less) Money Than You

You're a struggling artist and your BFF just got promoted—again! Income disparities between friends can cause a rift if you're not careful. Here are tips on how to navigate this potentially awkward social situation.

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Birds of a feather flock together

No matter your financial situation, you became friends for a reason, so focus on what you have in common. For example, if you went to the same college, seek out college alumni events together. “There’s the old adage, ‘birds of a feather, flock together,’ or, as my research has discovered, friendships that last are based on shared values,” says Jan Yager, PhD, sociologist and friendship expert and author of When Friendship Hurts. “When different income levels are involved, as long as the basic values are the same, you will be able to handle the income disparity.” Here are 24 little ways you can be a true friend.

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Assume frugality

Don’t let a fancy car or big house fool you: You probably don’t really know what is (or isn’t) in your friends’ bank accounts, especially when it comes to newer friends. Perception can be deceiving so if you’re unsure of a friend’s income level, assume they like saving money, even if you suspect that have lots to spend. “It’s best to assume your friends appreciate frugality when suggesting restaurants or activities to do together,” says Pamela Yellen, financial security expert and author of The Bank On Yourself Revolution. “Be the first to throw out a couple lower-cost (or free) options then, if and when you discover you and your friends both wish to—and can afford—higher-priced activities, you can raise the bar…but do it slowly.”

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Be honest

You don’t have to share bank statements but, hopefully, no matter your financial situation, you feel comfortable enough to be honest with your friends. “The biggest financial mistake you can make with friends who have more income or a higher net worth than you is to avoid being honest about the types of activities you prefer doing, and end up feeling uncomfortable or pressured to overspend,” says Laura Adams, personal finance expert, author and host of the weekly Money Girl Podcast. “If a higher-earning friend suggests plans that are over your budget or could put you in a difficult spot, don’t hesitate to explain that you’re watching expenses and need to decline the offer.”

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Meet on neutral territory

Usually, staying in is more financially savvy than going out, but sometimes a beautiful home can stir up feelings of discomfort or jealousy, and going out might actually be the better option. “It might be tough on the friend who doesn’t have as much income, or wealth, to see your multi-million dollar mansion set on five acres,” Dr. Yager says. That’s especially true if you started out at the same income level.

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Let the lower earner make plans

If you’re the higher-earning friend and struggling to determine what your lower-earning friend is comfortable with spending, let him have the first stab at making plans, since they likely have more restrictions, says Adams. If you earn less than your friend, be the first to jump in with suggestions. Here’s how to deal with a cheap friend.

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Focus on the experience

Make an effort to take expensive material gifts off the table for friendships of all income levels. “My husband and I have close friends who are at different income levels, so we keep in mind that relationships and experiences are what create lasting memories,” says Yellen. “That’s why we don’t remember the ‘stuff'” we got for the holidays two years ago.” She adds that “some of the best things in life really are free or low cost, so suggest activities you can do with your friends that will create memories that can last you a lifetime.” Here are almost effortless ways for anyone to become more frugal.

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Get some fresh air

A healthy friendship not only supports good financial health, but also the health of your body and mind. Seek out activities that support a well-rounded lifestyle for both parties, which as a bonus, are often free or low-cost. “Spending time outdoors with a friend is always a fun, healthy, and affordable option,” says Adams, “Going on a walk or hike, taking a day trip to the beach, or planning a picnic in a beautiful spot are examples of plans that don’t lead to poor financial decisions.”

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No matter your income level, volunteering is a great way to make yourself and someone else feel great—and it’s free! Whether you’re higher or lower on the pay scale than your friend, Dr. Yager suggests volunteering as a great way to spend some time together without sensitive money issues getting in the way. Need to meet some new pals? Here’s how to make friends as an adult.

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Start a book club

To stimulate your mind and give your wallet a rest, join or start a book club. Books are relatively affordable for most income levels (and can always be checked out of the library). “You could also share the book, passing the copy along after one of you has finished reading it,” Dr. Yager suggests.

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Go Dutch

Whether you split the bill or take turns picking up the entire tab depends on your social circle but, to be mindful of varying income levels among friends, going Dutch and planning ahead of time to split the bill can ease some stress on the lower-earning friends or couples. Yellen says this allows friends or couples to have a little more control and order based on what they are comfortable paying for when the bill arrives.

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Pick up the tab

It’s usually dangerous to allow one friend to pick up the tab more frequently, just because she makes more money. It can create negative feeling in both directions but that really depends on the situation and the friendship. “It depends whether both people feel comfortable with that arrangement,” says Irene S. Levine, PhD, psychologist and friendship expert. “If either friend feels uncomfortable (say one friend is feeling used or the other is feeling dependent), it can create resentment and hard feelings.” However, if one friend is temporarily earning less and the other pitches in for a few extra meals or movies until said friend gets back on their feet, the pair can make it through unscathed.

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Eat in

Avoid high restaurant prices and skip the awkward moment when the bill arrives or the awkward pre-meal discussion about going Dutch and just eat in instead. All of our experts suggested some form of eating in to both save money and to save face when it comes to income disparities. Whether you alternate hosting or you cook together, eating in can be much more financial feasible for some friends and couples, especially couples who are watching their spending and have children since this can save them the cost of childcare or additional meals out.