Do You Stick With Friends Based on Financial Equality?

[Singuy]

My Co-worked raised a point the other day about how a lot of her old high school friends became acquaintances due to financial inequality. She claimed that those friends just can't keep up with her current life style, or she feels bad how they struggle to "be on her level". I am assuming her friend's household income is near the American's average, and her household income is almost 300k/year. She claimed that it's a pain to cater toward these friends when picking out restaurants or things to do..and she feels resentment from her friends(perhaps wishing her to fail?).

What do you guys think?(besides the fact that she seems extremely snobby)...do you see your friends who are poorer(or richer) becoming acquaintances and you end up hanging out with people who makes or live a similar lifestyle as yours?

[disneysteve]

My Co-worked raised a point the other day about how a lot of her old high school friends became acquaintances due to financial inequality. She claimed that those friends just can't keep up with her current life style, or she feels bad how they struggle to "be on her level". I am assuming her friend's household income is near the American's average, and her household income is almost 300k/year. She claimed that it's a pain to cater toward these friends when picking out restaurants or things to do..and she feels resentment from her friends(perhaps wishing her to fail?).

What do you guys think?(besides the fact that she seems extremely snobby)...do you see your friends who are poorer(or richer) becoming acquaintances and you end up hanging out with people who makes or live a similar lifestyle as yours?

Great topic! This is actually something I think about somewhat regularly.

We have found that we tend to have a lot more in common with folks who earn less than us. I'm a physician and don't have a single friend outside of work who is a doctor too. Why? Because we've made a conscious decision over the years to not live the "doctor" lifestyle. I drive a 9-year-old Toyota Camry while the doctor's parking lot at the hospital is packed with BMWs, Mercedes, Lexus, Infinitis, Porsches, etc. I work in a pair of khakis and a dress shirt while my peers are wearing belts that cost more than my entire outfit. For vacation, we drive 1,000 miles to Disney World and stay in a rented condo offsite while they fly first class and stay at the Grand Floridian. They send their kids to private school, have a nanny and maid service, while our kid went to public school and our house is as clean as we have time to make it. We shop at Target, Goodwill, and garage sales while they talk about their latest purchases from Nordstrom or Coach.

The one place where hanging with friends who earn less sometimes becomes an issue is that we are living this way by choice while they are doing so out of necessity. That means we are able to splurge from time to time on stuff that they simply can't afford. Dining out is a good example that your friend touched on. When our friends go out to eat, it's often to trashy chain restaurants like Applebee's, Chili's, Fridays, etc. We can't stand those places. If we are going to dine out, it's going to be at a nice chef-owned one-of-a-kind restaurant where dinner for two might run $75-100. The result is we don't often go out to eat with our friends.

Debt and savings is another area where we differ. Thanks to our chosen lifestyle, we're able to save and invest 20-25% of our income and be debt-free except a small mortgage and what's left on a car loan. Several of us have kids in college now. While we took no loans for year one and will take no loans for year two, they're talking about all of the different loan options they've had to learn about and how much debt has already been racked up. So we can't really contribute anything useful to those conversations or share when they're talking about credit card debt.

Our daughter has experienced this problem herself both in high school and now in college. Most of her friends at school are perpetually broke. She'll say something about ordering a pizza and they all say they have no money. She's happy to treat but doesn't want to make them feel bad. It's awkward when they're talking about how they will afford tuition next semester when she knows hers is all taken care of. Or when they are talking about their student loans and she has none. To be honest, it makes her somewhat uncomfortable, but not to the point where she would want "rich" friends because she just doesn't have that much in common with them. She relates much better to the folks who come from more modest families.

I hope none of this sounds "snobby". I don't think anyone who knows us would use that word to describe us but I totally understand where your friend is coming from as we deal with the same issues every day. I'm curious to hear what others have to say on this topic.

[Singuy]

I think it's the personality of your spending habits(or what you tolerate at least) dictates how long a friendship can last(when we are talking about financial similarities).

My wife and I make as much as all our 8 friends combined...and yet I'm usually the one who shy away from anything expensive because it's how I was raised. One of my wife's friend is into fashion, brand names, and expensive experiences. In fact I'm constantly pissed off at all the crazy ideas she put into my wife's head..like spending 300 dollars on a 2 hour exotic zoo experience. I'm always saying that this girl finds the MOST expensive weird out the left field experiences.

I have experienced a little bit of what my topic stated. This friend of my wife's now tries to dodge me(only hangs out with my wife if I'm working..lol) because we usually ends up arguing about the value of saving money. Every time she brings up something expensive(it could be like eating out and spending 150 dollars), I would say maybe for a special occasion and she would roll her eyes and asks us why I am so cheap and what are we going to do with all our money? This usually ends up in an argument..lol

Now she's trying to buy a house with the husband and doesn't have a down payment. Her and her husband makes 140k/year combined(gross)..so you can see how wasteful these friends can be. They lease an Acura, an Audi SUV, pay 2k on rent on a house WITH A POOL, and buy rolex watches for the hubby and gucci bags for herself. They have made a total of 500k now and have NOTHING to show for it..no car, no house, and no savings.

We are all in our early 30s and are all health professionals. The difference between my net worth and hers is night and day. I paid off a 400k house in 7 years, used home equity and bought a foreclosure with cash and now have a net worth of almost 900k and debt free/mortgage free. This friend and her husband have a dog, a rolex watch, some hand bags, a ripped $7000 wedding dress, and 7k in the bank. So I don't think it depends on how much money you make, but what you do with that money that matters.

[disneysteve]

I don't think it depends on how much money you make, but what you do with that money that matters.

Absolutely. And your attitude and mindset about spending and saving is a huge factor. Frugal by choice or frugal by necessity is still frugal in the end. There are plenty of things that we could "afford" to buy or do but choose not to because we don't see value in spending our money that way. That can lead to awkward situations when your friends are making different choices. Depending on the topic and the relationship, sometimes I'll say something but more often I'll just keep quiet and let them live their lives the way they see fit. Just as you've seen, though, it often means that you're doing well while they are struggling due to poor financial choices they've made.

[rob62521]

Most of our friends either made or make similar to what we make. I think it is because they are people we work with. Of course my husband has a friend from high school who made far more than we did at the time, We would do things with them based on what we could afford. Things have evened out now. I don't think it is a matter of being a snob, but similar interests that make the bond.

[kork13]

I can't afford to only keep friends who are in financial parity with myself!

My wife & I are both from modestly "humble" backgrounds... My parents are a meteorologist & a teacher. Her parents are a teacher & (mostly) a SAHM. So perhaps that tends to make us lean toward middle/lower income crowds for our friends. As a military officer, my friends from work tend to earn exactly the same as I do. My friends from church are the most diverse, from some earning minimum wage to others who are very successful businessmen, engineers, and doctors. We live in a middle-class neighborhood, with whom (I presume) we earn approximately similar incomes. But as we all have seen & attested to repeatedly, true financial security lies not in income, but in accumulated wealth, which likely varies FAR more than the income-profile of my friends.

I think for quality friends, finances don't matter. I have some very good friends who earn minimum wage, and others who earn at least double what I make. Money can change a person, but for good people, the ones you truly want as friends, money is merely a side-note to life. If money is what defines a friendship, I would submit that you have a rather poor relationship with the person.

With that said, I do absolutely see and understand the sentiments brought up by Singuy. In general terms, most of my friends are not as financially secure as my wife & I. That is mostly just because I have very good saving habits, and have had 10 years of income (and very good advice) behind me to have secured my financial standing. So as much as I am & can be quite cheap & spending-averse, we do have the freedom to spend somewhat freely on things that we deem worthy of it. Owning a nice home with nearly 50% equity & quality furnishings, traveling somewhat often, eating periodically at nice restaurants, attend plays/shows, and generally just enjoying some "nicer" things in life. But all of that stands in stark contrast against (for example) my wife's sister, who my wife has said receives some public assistance, or one of the tenants (a good friend) in my wife's house, who struggled for months to pay for a desperately-needed root canal. That disparity really can be quite awkward to face.

But as I said above, for good, quality friends, finances are (IMO) a side-issue. We are someone's friend, first and foremost. When a friend needs help, we give it. We guided my wife's tenant toward a few methods of earning a bit more income, and gave her some advice to help improve her finances. As a Christmas gift, we "gave" all 3 of her tenants a month's free rent. We can recognize when a friend isn't doing great financially, and rather than going out for dinner and a movie, invite them over to our house for dinner & a game night (which we honestly prefer anyway).

We have had friends remark on how "well-off" we are, which is absolutely a bit awkward and almost embarrassing (odd to be embarrassed by success/security, isn't it?), but we write it off and don't make an issue of it. I've also got a few friends who are significantly more wealthy than I, and while that as well can be a bit awkward when you realize just how wealthy a friend may be compared to yourself, all it takes is to look past the money and focus on the relationship that you have with the person.

Rich and poor, everybody needs good, trustworthy, meaningful friendships. I think it's actually important to have friends across a broad cross-section of wealth/income/society in general... It teaches you to be both humble and magnanimous, and teaches you to focus on what's truly important in relationships.

[Singuy]

My best friend's uncle is worth 40-60 million. My best friend's father is a general physician The physician used to keep up with the Jones and try to hang with the uncle..VIP, yachts, cars, the whole nine yard..but eventually he just couldn't keep up anymore..to the point that he had to borrow from my friend to pay the bills.

I think there's a whole different world out there for people who make such money..expecting to keep up when you don't make such money is just plain dangerous.

On the flip side, I don't know if hanging out with people who are too poor is ideal either. There's a level of resentment hovering in the room. Everytime you make a sound advice(like investing for retirement), these friends will end up rolling their eyes and say things like 'well we are not like you, who can afford xxxx."...then they ends up doing something you think is wasteful.

The other day I was at Golden Corral eating..this family of 6 walked in. Everyone ended up getting a soft drink..when the cashier asked them to pay..they realised they just didn't have enough money. The manager gave them a discount and let them eat anyways because 4 of them were little kids. Then the dad pulled out an E-cigarette and started smoking.

I don't know if I can ever hang out with people like them..not because they are poor, but because they are just plain irresponsible.

[sandrark]

It's an interesting topic, and we've certainly had conversations about it.

One of my best friends post-high school was a co-worker from an early job. We were both young, working for an engineering company, making similar money. I was going to college at night, and eventually transferred to a 4 year university.

She stayed in that job until she was laid off, and then repeated that pattern a lot. She eventually moved to my current location after the 5th or 6th layoff when I moved her up to my house. I helped her get a job the first day on the market, and let her stay at our place for the first 4 months while she saved up funds for first/last/deposit on an apartment.

Over the years, she struggled, and mainly from her own actions and decisions. She never finished college, but I did. My earnings began to outstrip hers, and my jobs were increasingly managerial - while hers stayed clerical.

I bought a house, then got married. She flitted in and out of relationships, never married, never bought a house. She ended up passing away at age 53 from cancer a few years ago.

In the 5-6 years before her illness, I found myself downplaying certain successes, because it did chafe her (or, it seemed, motivated her to ask for money). Neither was comfortable. In fact, at one point, I had to tell her if she continued asking my family members (including my widowed mother) we would be ending the friendship.

It was very hard. And I felt a lot of guilt. In the end, we resolved it amicably, and were still friends when she passed away. But I can see why it might evolve into a problem for people who are careful and thoughtful and from a lower-class background where money is scarce.

[sandrark]

My brother has the opposite problem - he makes good money, but he has clients who are extraordinarily wealthy - as in billionaires.

He and his wife struggle to have friendships with people who habitually do things like hop on a plane and stay at a Caribbean resort in a villa with a private butler, to the tune of $10k per day.

They've managed, but it's hard - his VERY good living and income still don't feel like "enough." IIWM, I'd be hanging out with people making more like my kind of income. But since they bought a fixer-upper in a great neighborhood in one of the richest zip codes in the country, they're regularly thrown together with people who have ginormous incomes.

[dawnwes]

I have friends who make more, and friends who make less.

I don't resent any of them.

I just helped a friend with her daughter's $3,000 wedding because she couldn't afford more. And I attended another friend's son's $30K wedding. I feel comfortable with both of them!

[HappySaver]

For me relative income doesn't matter with friends. Level of education and values do.

For instance, I was unable to keep a friendship with a high school friend who didn't go to college, but I'm still friends with my elementary school friend who went to a different college in a different state across the country. We have more in common that we can talk about. And our household income levels are very different, but we both have relatively similar outlooks on life and how you should spend your money.

[Drake3287]

We sort of have the same problem but with family members, not friends. Wife and I have done very well simply because of saving money and investing wisely. We both have good jobs (I have since retired early) but nothing over the top. Financially, we are well off now and are enjoying our years of saving money. Newer cars, nice vacations, kids college paid, that type of thing. We also go out of our way not to talk about finances or talk about ourselves.

Everyone else in our families live paycheck to paycheck and the thought of retirement for them is only a dream. Although my wife and I are very humble people, it still makes for a difficult situation at times when around family gatherings. Driving up in a new car doesn't go over well and the thought about us talking about a recent vacation in front of them doesn't even cross our minds.

There isn't any obvious negative feeling towards us but it's still uncomfortable feeling at times. I was recently introduced to someone by my sister as her rich brother. I felt like crawling under a rock after her saying that.

[HappySaver]

WDriving up in a new car doesn't go over well and the thought about us talking about a recent vacation in front of them doesn't even cross our minds.

That's interesting because we're also more financially secure than many of our family, but they're the ones buying or leasing expensive cars and always traveling! It drives me nuts some of the cars they drive that they clearly can't afford!!

[Drake3287]

Your right, that's generally the case. I know a ton of people that are driving around in $40,000 car's and trucks and live in an apartment and have no savings. Most people that are financially responsible would never do such a thing.

[Nika]

Disneysteve, you say you save 20-25% of your income. You mean that difference accounts for private schools, nanny, chauffeur, Porsches and vacations?

Most of our friends are around our level (because they are all from college). Some are higher, some are lower, but not dramatically. Only one person from our college group is annoying me like crazy - he is a "founder and CEO" of businesses that make no money, and his main occupation is blowing smoke up people's ***es. He recently moved back in with his parents, with his wife and toddler, to "take care of them". (Parents that she hates, btw, and that was both of their reason to change their last name from a clearly Jewish one to the name associated with British aristocracy - "to get away from their family"). After his latest venture failed, the start-up expert and CEO is now back living with his mom and dad. Now he started a new one, found some hard working programmer guy to actually be executing it, while he again is the "CEO". I feel bad for the guy that actually does the work that fell for his bull.
(We don't hang out with him because in the college days he spread false rumors).