1. I’ll join them but not spend money. I’ll tell them ahead of time, “I’m watching my spending so I know it’s weird to go to a restaurant or go shopping and not get anything but I still want to see you and spend time with you, is that cool?” And yes, they might think it’s weird, or extreme, but that’s never something they say. They are always supportive and fine with it. Your true, good friends will react in the same manner!
2. I’ll propose a different activity. I’ll say, “Actually, I’m watching my budget, and although that sounds sooo fun, could we do something else like taking a walk in the park or [insert free local activity]?” Then we’ll come to some sort of compromise.
Christine: What would you recommend to people who might want to make friends but don't want to spend a bunch of money (like on endless coffee friend dates, pottery class, spin class, etc.)?
Rachel: Google free activities in your area. Think of yourself as a tourist of the city – what free museums, exhibits, or events can you attend? You’ll be surprised at how much is out there once you start looking.
Once you reiterate that you are on a budget enough times, your friends will get on board. Money does not need to come between a friendship. It shouldn’t be a barrier at all, and your real friends will understand that and always be willing to find free or low-cost activities. One of my favorite things to do with my best friend is just go to her house and hang out, eat snacks, watch a movie, and catch up.
Christine: What do you think people most fundamentally misunderstand about managing their money?
Rachel: I think what people most fundamentally misunderstand about managing their money is that it’s a lot like dieting. With dieting, you are trading instant gratification for long-term health. Do you eat the donut because it sounds delicious right now, or bypass the donut because it’s better for you in the long run? The struggle with dieting is making the right choice for your future self instead of your now self. It’s the same with money. Do you buy the shoes because you want them right now, or bypass the shoes because your money would be better saved for retirement? It’s easy to forget about your future because it’s so far away, and that’s why people can justify their spending. I’ll have more time; I’ll save money later; I’m not making enough now as it is… and suddenly you’re 40 and have nothing saved for retirement, because you kept choosing NOW over the FUTURE. Once you can switch your perspective and protect your future self, money decisions will become much easier.
Christine: Is there anything else in particular that you've learned about money and friendship that you'd like to share?
Rachel: When it comes to money and friendship, don’t mix the two. Don’t go into business with friends and family. Don’t borrow from or lend money to friends and family. If you do, think of it to yourself as a gift, not a loan. I just googled this quote and it rings so true: “Money lent to a friend must be recovered from an enemy.”