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COVID has created a money gap between friends, here's how to handle it

Lydia Smith
·Writer, Yahoo Finance UK
·3-min read
Dinner with friends. Group of young people enjoying dinner together. Dining Wine Cheers Party thanksgiving Concept
Research shows that differing finances can impact relationships. Photo: Getty

It’s not always easy to talk about money with friends. Whether it’s turning down an invitation to meet at a bar or to go for a meal out, it can be hard to tell people you can’t afford it without feeling embarrassed.

Money is a tricky topic of conversation to navigate, but it’s particularly challenging at the moment. While huge numbers of people in the UK are facing financial difficulties because of the pandemic, others have managed to weather the crisis.

According to a recent report by the Resolution Foundation, lower income households are currently turning to borrowing, while higher income households are increasing their savings. And this money gap is being felt between groups of friends.

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“We are in a situation where many people, including people close to us, will be having financial wellbeing challenges,” says Lee Chambers, a psychologist and life coach. “And while the mental health challenges are front and centre in people’s minds, it is important we remember that our finances can be a significant factor in how we feel.

“We must be mindful of how many of us feel about money in general. It is often a sensitive topic that stirs up feelings of shame, guilt and negative judgement,” he adds. “We should look to handle it so, and actively look out for our friends and make sure they are doing well.”

Research shows that differing finances can actually impact relationships. A survey of 1,000 people by Expert Market found that well over a third (39%) of richer Brits have cut ties with hard-up friends due to incompatible lifestyles.

“Financial inequality can cause significant tension in friendships. Money can often be a measurement of success, and is a barrier to inclusivity,” Chambers explains. “It can actually feel like you’re the one failing if your friends are insensitive about money.

“Communication is vital in these situations as if left over time, can lead to feelings of resentment and guilt,” he adds. “Being able to say that you can't afford this place, will so often lead to a group making a more inclusive decision. It might even plant a flag in the sand for others to say they are struggling too. Good friends will listen and understand.”

It is also important to set boundaries where possible. “By setting expectations of each other, it helps to keep sensitivity to the dynamic situation we find ourselves in today,” Chambers says. “Friendship is about so much more than finance, and in the bigger picture, laughter, compassion, companionship, and shared experience are all free.”

READ MORE: Why 'lifestyle creep' is a slippery slope for our finances

Remember that people hide financial problems, so we should be mindful of the clues. If you have a friend who rarely agrees to come to the pub or for dinner — or who seems anxious about splitting the cost of a birthday present for someone — it may well be because they’re worried about money. Suggest doing different things, like meeting in a garden for a drink instead.

“If you do identify anything that makes you feel that they may be struggling, approach them with kindness and empathy. Be the friend who listens without judgement,” Chambers says.

“Convey that you have also felt like this at times, and that they are not alone. It is a time for encouragement and support rather than advice and opinions. And ask them how they feel you could potentially help, and give them the space to consider their options.”