How to handle awkward money conversations with friends and family

We’ve all experienced those awkward moments where we may need to express a financial boundary. Our collective discomfort over the topic of money means that any disagreement in financial expectations can breed resentment and damage relationships, so it can feel easier to say nothing. Unfortunately, keeping mum about your money concerns to avoid an uncomfortable conversation also leads to resentment and strife.

Which raises an important question: As awkward as it may be to bring up a money beef, isn’t the momentary discomfort better than a broken friendship—or a broke bank account?

That’s why learning to navigate awkward financial conversations with grace and firmness is so important. Money discussions may never feel natural or comfortable, but they can protect your boundaries, your relationships, and your financial goals. 

Here’s how to handle three of the most common money dilemmas without losing your cool.

Keeping up with the Joneses

In any friend group or family, there is often a mismatch in spending behavior. While some members of the group are earning high incomes or are happy to spend money on experiences, others may be struggling financially or have different priorities for their spending. This can get awkward when the two factions are trying to plan a group activity.

Weddings can be a common example of this. Perhaps the marrying couple want to have multiple pre-wedding parties plus an out-of-town weekend trip to celebrate the end of single life. Cash-strapped friends may feel uncomfortable saying no to these requests, because it feels like saying no to the friendship.

What to say

In most cases, a mismatch in spending occurs because you are in different places in your financial lives. Someone who is not living paycheck to paycheck may not remember (or not know) how it feels to pay for gas with couch cushion change.

If you’re struggling to keep up with a high-rolling crowd, be honest with your friend group—and the earlier, the better. Share your budget for the bachelor party weekend during the initial planning stages. Explain that you need a separate check before you all order. And if someone suggests an expensive activity, you could respond by saying, “I can’t fit that in my budget right now.”

If the idea of telling the entire group about your budget is terrifying, you could instead talk one-on-one with the person you feel closest to. The two of you can make suggestions for low-cost or free options as alternatives to the pricier proposals.

Friends who truly care about you will accept your stated financial boundaries or your suggestions for low-cost fun.

Receiving an unwanted gift

There are times when an expensive gift can feel like a burden. Perhaps your paramour of only a few months gives you expensive jewelry. Or a wealthy relative offers to buy you a car even though you have been saving up for one yourself. Or your new mother-in-law gives you an heirloom fur coat despite knowing you are a vegan.

These gifts are often fraught because it’s unclear what the gesture means to the giver. If your new sweetheart gives you diamonds, that could simply be a symbol of their enthusiasm for the relationship, or it could be a manipulative tactic intended to make you feel beholden. The free-to-you car could come with significant strings attached, or simply be a way for your loved one to support you. And your mother-in-law may be making a pointed comment about your lifestyle, or simply want to welcome you to the family.

What to say

When faced with an expensive gift you don’t want, it’s important to balance the feelings of the gift-giver with your own feelings, needs, and values. So, always start with sincere thanks for the thought and effort behind the gift.

You might start by telling your gift-giver, “I can’t tell you how much I appreciate your thinking of me!” Then follow that up by saying you simply can’t accept the gift. Depending on the circumstances, you might explain why.

For example, you could tell your enthusiastic new love that you feel like it’s a little too soon, but you’re very excited about the relationship, too. You might also let your deep-pocketed relative know that it’s important to your sense of independence to buy yourself a car. Or you could tell your mother-in-law that the heirloom fur is something you simply can’t wear.

Being honest has an added potential benefit: The gift-giver’s reaction can also tell you a great deal about their motivations for the gift.

Following up on an IOU

Your roommate asked you to spot their half of the rent two months in a row. The concert has come and gone, but your friends haven’t paid you back for the tickets. The grand you loaned your brother-in-law to get him out of a tight spot would really come in handy for your budget this month.

There’s an excellent reason why “don’t lend money to friends and family” is on the personal finance greatest hits album. Loans among peers can make everything awkward. We tend to judge every spending decision we see our borrowers make, which can cause seething resentment. And borrowers may start to avoid their loved ones if they feel guilty about not being able to repay.

So, how do you go about getting your money back after asking nicely hasn’t seemed to help?

What to say

If you’re loaning money or fronting someone’s half of the rent, it’s best to set up the terms of the loan when you first hand over the money—in writing. That ensures you and your borrower both know exactly what to expect.

But it’s not too late to create a written agreement after you’ve already made the loan. Approach your friend and say that you’d like to put the repayment plan in writing.

Modern technology makes this much easier, because apps like Venmo, Zelle, or CashApp allow you to request payments. If you’re uncomfortable having a face-to-face conversation with your friend, sending a request via an app is a low-key way to remind them of the loan.

Embrace momentary awkwardness

Awkward conversations are no one’s idea of fun, but it’s generally better to establish boundaries and expectations with an uncomfortable heart-to-heart than let hurt feelings fester. Avoiding awkward financial conversations just kicks the can down the road. Embrace the short-term discomfort in favor of the long-term relationship.

Emily Guy Birken is a Milwaukee-based personal finance writer. Her books include The 5 Years Before You Retire, Choose Your Retirement, Making Social Security Work for You, and End Financial Stress Now.