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Friendship and Money: Minimizing Losses

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Given the uncertainties of the global economy and the high rates of unemployment, money seems to be on everyone’s minds these days. This is the second part of a two-part interview on Friendship and Money with MSN Money columnist Emma Johnson. Part I of this interview can be found here: She’s Fired, You’re Not.

How do economic inequities between friends affect relationships?

In a perfect world, money wouldn’t affect friendships. But there are a few things going on here. For one, in our culture we measure success in terms of professional accomplishments and money, and we often judge ourselves by these sticks. So when one friend gets ahead financially, another might start feeling left behind and less successful all around.

The other thing that happens is that money often has a big impact on our lifestyles. When one friend starts making big bucks, she might move to a tonier zip code, start worrying about private schools for their kids, and spend weekends researching a second home to buy. This is her new life. The friend from way-back-when can’t identify with these new concerns, and vice versa. These are not trivial differences and can create big rifts in how people relate.

There are practical considerations, too, depending on the relationship. If a pair of friends is in the habit of spending money together – be it dinners out, shopping or vacationing – that can all come to a grinding halt once one party can no longer afford it. Worse, the unemployed woman may feel the need to now live beyond her means just to keep that much-needed friendship alive.

Should women talk openly with each other about their financial woes or those of their partners? Why?

I believe we all need someone to talk to about the important things in our lives. We’ve been raised to believe that talking about money is impolite, but it is such an important part of our lives – and often our worries – that the practice of bottling up all our money woes might just be at the root our country’s lousy financial habits.

Blabbing about the nitty-gritty of your income, credit card statements, taxes and inheritances is probably not a great idea most of the time, but there are no holds barred when you have a really truly great friend who will not judge you, will give you some tough love when needed and, most importantly, listen. On the other hand, if you’re tickled because your husband got a raise, your great aunt died and left you a chunk of change and you found a wad of cash in your attic, remember: no one likes a braggart.

Are there circumstances when you should lend a girlfriend money to keep her afloat? What are the perils? What safeguards would help preserve the friendship?

Lending money to a friend or relative is always a tough situation, and can be a real stressor in the relationship. Whenever you get together, the money will be on everyone’s mind, but no one will talk about it. And there is no better way to create resentment than to have an unpaid debt between parties.

If you do decide to lend money, write up a contract signed by both friends, and have it include terms of the loan, repayment dates, interest, etc. But lending money should be a business decision, not an emotional one, and that is tricky between friends. Ask yourself:

  • What is this person’s financial history?
  • What is the likelihood they will be gainfully employed soon?
  • Is the loan for a true emergency or basic living expenses, or something frivolous?
  • And perhaps most important, Will this loan put my own finances in peril?

In an article I wrote for Psychology Today about friendship and money, I profiled a woman who made all her own money and had a very modest existence, one she shared with a girlfriend who later came into a significant inheritance. The newly rich friend felt guilty about it and insisted on treating her friend to meals out, vacations and trips to the mall – which the working woman resented very much. They were able to talk it though, but that financial inequality proved to be a big deal.



Emma Johnson is a New York journalist who writes about business, finance and money topics for publications including the New York Times, Wall Street Journal, Entrepreneur and Psychology Today. Her series on MSN Money, “Jump Start Your Life,” explores money topics for people in their 20s and 30s.
 

Friendship and Money: She's fired, you're not

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Any major life change--including an unexpected job loss or other threat to economic security--can increase the risk of a once-close friendship falling apart. As such, the global recession is challenging untold numbers of female friendships. In the first of a two-part series, I interviewed journalist Emma Johnson, who covers money and finance topics for MSN.com and other national publications, to find out her thoughts on this topic:

 

In the current economic climate, where job loss is rife, how can getting a pink slip or being furloughed challenge friendships?

Women can be very competitive with each other. Traditionally women have competed for male attention and loyalty. The species depended upon it. The more women's sexual partners were loyal to them, the better off the women and their children would be since men were the breadwinners and women had few economic opportunities.

But the game is different today. We compete in other areas of our lives, including professionally. Even if we aren't in direct professional competition with our girlfriends, that rivalry can still be there. Of course it isn't always the case, but it often is, and worst of all, most of the time we don't realize it.

So if two friends are engaged in even a friendly contest about who's ahead in her career, a layoff can give the other woman the edge in this unspoken game. That can create resentment from the unemployed party--who is already distraught about her new economic situation.

 

How can women minimize the risk of losing their friendships if one friend is spiraling downward economically?


I'm a big fan of talking it out, though all the psychology experts don't agree with that. If the employed friend can say, "I'm so sorry you are going through this. What can I do to be supportive?" Then, give her friend some time to think about what she needs; that can go a long way. Likewise, the unemployed friend might need to talk to her friend and say, "I'm really worried about money right now. Would you mind if we find some less expensive ways to spend time together until I get back on my feet?"

There are other things to think about. Unemployment and financial worries are top factors in stress, sleep loss and depression, which can take a big toll on one's overall well-being, including their relationships. If everyone is aware of the realities of the situation, tough times can strengthen friendships. But the working friend needs to be willing to be supportive, and sometimes the friend in the tough situation needs to allow themselves to be vulnerable and cared for.

To be continued...

Emma Johnson is a New York journalist who writes about business, finance and money topics for publications including the New York Times, Wall Street Journal, Entrepreneur and Psychology Today. Her series on MSN  Money, "Jump Start Your Life," explores money topics for people in their 20s and 30s. 

*A version of this post appears on The Huffington Post

 

 

What to do and say when your friend gets a pink slip

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Last month, I posted Girls with Pink Slips on my blog, an article about how friends can help one another cope with the trauma of no-fault job loss, which seems to be so rampant with the downturn of the economy. Unfortunately, none of us are immune to the volatility of the current job market.

Apropos of that post, Debba Hauppert, the founder of Girlfriendology interviewed me on the same topic. You can listen to my podcast interview which is posted on Girlfriendology. Just scroll down the page to the arrow and download the MP3 file.

To learn more about Girlfriendology, an online community based on "girlfriend inspiration, appreciation, and celebration," read my blog interview with Debba.

 

 

 

 

 

 
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