Money is no longer an off-limits conversation topic for younger generations. Around 37% of Gen Zers aren’t afraid to ask their friends how much money they make, and around 25% of millennials say the same, according to a GOBankingRates survey.
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Despite this growing comfort around salary transparency, money — and wage gaps, in particular — can still create uncomfortable social situations. If you make less than your peers, how do you respond when they want to go on an expensive outing, eat at a pricey restaurant or give you an expensive gift? According to financial and relationship experts, here’s what to do when your peers are wealthier than you.
Be Honest About What You Can Afford
Communication is crucial to maintaining a budget when your peers make more than you. Jordan Bierbrauer, a licensed clinical social worker with Thriveworks in Colorado, encourages people to clear the air by telling their friends or partners when they can’t afford something.
“Being honest in this manner may prompt the other person in the relationship to only plan things they know you can afford,” Bierbrauer said. “Openly communicating your boundaries and limitations is never a bad thing.”
Taylor Kovar, CFP and CEO of The Money Couple, said trying to hide the fact that you’re on a budget will only lead to more relational tension or overspending.
“The friend who makes more than you probably knows it, so there’s no reason to try to hide it,” he said. “If you can’t afford to go out three times a week, then speak up and tell them. We start to see issues when someone doesn’t communicate effectively.”
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Don’t Assume You Need To Give Expensive Gifts
It’s natural to want to reciprocate when you receive a gift. But what if the gift you receive is out of your budget? Remind yourself that the giver may not expect a gift back. And if they do, you still have other, less expensive options.
“If you really want to give them something, perhaps focus on giving them a fun experience instead of a physical gift — like a trip to the zoo, a hike in a unique location or making them a nice meal,” Bierbrauer said. “The memories of a fun experience are likely to last longer anyway.”
If the situation makes you uncomfortable and continues to occur, don’t be afraid to respectfully ask your peer to keep gifts under a certain dollar amount, said Naoko McKelvey, CFP and senior financial advisor at Blue Chip Partners.
“You could even request that, instead of gifts, you donate to a charity in their honor to help someone in need,” she said. “I often find that thoughtful and sentimental gifts hold more value than something expensive.”
Don’t Feel Pressured To Attend Every Event
From travel expenses to ticket costs, certain events can quickly become expensive. But remember: Just because you’re invited to an event doesn’t mean you have to attend, McKelvey said.
“When I was younger, we were invited to an amazing destination wedding,” she recalled. “It was so hard to decline, but we honestly told our friends that we weren’t in a position to afford it because, at the time, we were paying for our graduate school programs and trying to remain fiscally responsible. … Our friends were sad we couldn’t join, but they understood.”
Evaluate Your Relationships
But what if someone continues pressuring you to spend more than you can afford or makes fun of your lower-salary job? It may be time to reconsider whether this relationship is worth pursuing.
“If someone is teasing you about how much you make or your job, I think it is safe to re-evaluate if this is someone you want in your life,” Bierbrauer said. “I would recommend distancing yourself from this person, as their values will likely not match yours.”
Share Your Financial Goals With Your Significant Other
Pursuing a romantic relationship with someone who spends more money than you can be difficult — but it’s not impossible. As the relationship progresses, be sure to discuss your financial goals with them so you’re both on the same page, Kovar said.
“Having money conversations throughout the dating relationship makes for wealthier, happier marriage relationships,” he said.
Come Up With Inexpensive Date Ideas
Date night doesn’t have to drain your budget. If your significant other wants to enjoy an expensive activity, try offering free or lower-cost alternatives for date nights, McKelvey said. This could include a picnic in the park, going on a hike, visiting a local museum, going to the beach or having an at-home dinner and game night.
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