“Next time, I’ll pick the restaurant,” Jen told her friend Sara as she read the menu, eyes open wide. “These prices are steep.”

“Wait until you try the food,” Sara replied. “It’s worth it.”

Jen shook her head. “Sure, for a big spender like you, jetting off to Costa Rica for vacation.”

“It’s not that expensive—I know you’re making money. And speaking of vacation, you should come with us,” Sara said. “We’ve planned an amazing trip. I mean, why wait until retirement to enjoy life, right?”

Jen shook her head. “Sounds like fun, but we’ve already planned our vacation. I can’t wait to hear about your getaway though.”

Friends with different priorities

Later, Jen told her husband Mike about her and Sara’s dinner date. “It’s always good to see Sara, but sometimes I feel like she’s trying to convince me to spend money I don’t have. You and I have a family budget and retirement plan goals. Sara’s determined to spend every dime she makes.”

“Trust me, I know,” Mike said. “Remember her destination wedding? Or all those dinners when everyone ordered expensive drinks and high-priced entrees, and then we split the bill?”

“It’s been a constant issue with Sara,” Jen said. “But her spending habits have become more extravagant over the years.”

How can Jen stay friends with Sara without blowing her budget? Find out how Jessica McBride, a senior financial advisor with Vanguard Personal Advisor Services®, would advise Sara in this hypothetical story.

Jessica’s advice

Excessive spending is a common problem for people from all age groups and income levels. Socializing can pressure us to spend more money than we want. In addition, everyone’s financial situation and priorities differ. Some people can afford to save toward their financial goals and have fun at any expense. Others may be overspending, neglecting their savings or even worse, putting themselves in debt. The key is to focus your attention on achieving your financial goals, not worrying about how your friends spend their money.

Here are some strategies that can help take the stress out of these tricky social situations.

1. Be the planner

In this case, Jen was on the right track suggesting a less expensive restaurant for their next outing. Sara and Jen could also meet for breakfast or coffee, a less costly rendezvous.

Realistically, Sara might be in a financial position to afford an expensive restaurant from time to time. When she is, Jen should look at the menu beforehand and figure out what to order to keep herself within her budget. Otherwise, Sara might indirectly influence Jen to spend more than she’s willing or able to.

When the server first greets them, Jen can request separate checks, preventing Jen from subsidizing Sara’s higher dining expenses.

Jen should allow herself a discretionary spending budget and attend the entertainment activities that fit in her financial plan. If she’s concerned that social pressure may influence her spending, she should bring cash, preventing her from spending more than she budgeted.

2. Schedule something free (or cheap)

Not every social get-together costs money. Exercise can be a great way to spend time with friends without burning through cash. As an added bonus, it’s healthy. Jen and Sara can meet for a scenic hike, a long run, or an invigorating bike ride. If they’re not up for physical activity, they could plan to stay at home and watch a movie or host a game night with other friends.

3. Don’t be afraid to say no

It’s better to say no than to resent spending money you shouldn’t have. Feeling resentful about money can lead to resenting a friendship. Friendships should be authentic and honest, so Jen should let Sara know she has financial priorities that limit expensive outings and pricey special occasions. As a friend, Sara should accept Jen for her values, opening herself to the idea of spending quality time with Jen—without squeezing the budget.

Share your thoughts below about how you’d handle this situation or how you’ve addressed it in the past.

 

 

Notes:

  • All investing is subject to risk, including the possible loss of the money you invest.
  • Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.