Tuesday, Sep 24, 2019 • 31min
Friends With Money—And Friends Without
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Whether you’re the friend who has cash or the friend who needs it, money—or a lack of it—can strain a relationship. How do you split the brunch bill or plan a trip when one friend is flush and the other’s flat broke? On today's episode, we'll hear from two women on opposite ends of the financial spectrum: one who has more money than most of her friends, and one who has way less. Both asked for advice on navigating friendships while being mindful of her own bottom line.
Expert: Stefanie O'Connell. For more information on today's episode, visit glamour.com/money.
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Talking about
Speakers
(2)
Samantha Barry
Stefanie O'Connell
Transcript
Verified
Break
Samantha Barry
00:30
She Makes Money Moves is a production of
Glamour
and iHeart Radio
.Share
00:35
I have on occasion had people come to me to borrow money or wanting me to help them out of a jam in some way, and I've always handled that the way that my dad taught me, which is never loan money to friends that you intend to get back.
Share
Samantha Barry
00:54
I'm
Samantha Barry
, the editor in chief of Glamour,
and this is She Makes Money Moves.Share
01:00
You can choose your friends but you can't choose their salaries or their spending and saving habits. Even in the strongest friendships, there's an imbalance when one person is better off financially. Whether you're the friend who has the cash or the friend that needs it, money or lack of it can strain a relationship.
Share
01:19
No, I'll get this one and I don't want to fight out of you. Save it for your down payment.
Share
Samantha Barry
01:25
How do you split the brunch bill or plan for a trip when one friend is flushed and the other is flat broke?
Share
01:32
Compared to my friends currently I definitely feel like I have less money. Sometimes it's hard to keep my cool when a friend is really just being genuinely nice like, "Oh, do you have another job yet? Oh, I'm just curious what's the job hunt like?" And I'm like, please don't ask me that.
Share
Samantha Barry
01:48
Today we'll hear from two women in wildly different financial situations. You just heard from Sierra, who made $18,000 last year working two part-time jobs, one of which she just quit so she could focus on finding full-time work in
New York City
.Share
02:05
And then there's Audra, the woman you heard at the top of the episode. She's 36 and has a six-figure salary as the owner of a construction business. Let's hear from Sierra 1st.
Share
02:16
My name is Sierra Slaughter, I'm 25 years old, I live in upstate
New York
and I recently quit my job, have mounds of student debt, and want to maintain friendships without having a lot of money to spend.Share
Samantha Barry
02:28
Sierra has always wanted to move to
New York city
. But after graduating from college in 2016 with a degree in film and media studies, she didn't have a job and she didn't have prospects. So she moved home with her parents who live two hours north of New York City
.Share
02:46
She got two part-time jobs, one as an assistant at an independent film festival, and another one working the box office of a performing arts center. Each job paid $11 an hour. Her paychecks were small, but she's lived rent-free for the past three years and her parents pay for her food as well.
Share
03:05
She covers her gas, car repairs and her cellphone bill, and put $600 a month towards two student loans. She's built up her savings account to almost $10,000 by being incredibly thrifty at every possible turn.
Share
03:22
So I really try to be like, oh, you want to see this 7:30 movie at the mall so it's going to be $15? Well, if we could just go like five o'clock and only spend $11, that would really help me a lot. Which probably isn't even true, but in my mind I'm like, hey, saving $4 here, $2 there, I hope that one day it's all gonna add up. And then I'll be like, look at all this money I have.
Share
Samantha Barry
03:49
Sierra knows her friends, many of whom already live in
New York city,
are excited for her to move. They invite her to parties, on last-minute outings and for weekends in the city, but they aren't always understanding when she can't afford to join them.Share
04:04
It's just people that don't understand that like, "Oh you have no job", and then people don't necessarily know that that means you also have no income. They're just like, you have free time, so now spend that free time and money with me. And I'm like, that's not how it works when you don't have a job, you don't have an income.
Share
Samantha Barry
04:21
Like most 25 year old Sierra's also frequently invited to weddings and to be in the wedding party.
Share
04:27
Being in weddings is worse than being invited, because you need to buy the dress, you need to buy gift, you need to help with bachelorette parties or bachelor parties and you have to help with rehearsal dinners and you have to help with all of that, which is fine.
Share
04:42
I totally love these people, I really want you to get married, I'm super happy for you, so thankful that you asked me to be in the wedding. It's just like a cruel joke where it's probably the poorest I'm going to be in my life.
Share
Samantha Barry
04:54
Looking at social media where everyone else seems to have money to spare is discouraging for Sierra.
Share
05:00
It's like, how are all these people in my age doing really cool thing? They must have more money than me, right?
Share
Samantha Barry
05:07
Not necessarily, almost 25% of millennials live with their parents. About the same percent have credit card debt and more than 40% of paying back student loans. Sierra doesn't have credit card debt, but much of her story is standard issue for her generation. Our next guest Audra is on a very different financial path.
Share
05:25
My name is Audrey von Minden, I'm 36 years old and I actually own a construction company.
Share
Samantha Barry
05:32
Unlike many in her generation, Audra, who lives in
Florida
graduated from college debt-free. Her parents paid for her tuition with the money they had set aside when she was born. She didn't have credit card debt either, she used her credit card just for small purchases and she paid it off in full every month. But Audra was ahead of her peers financially long before that.Share
05:57
My dad was a wealth manager from the time that I was 12, although he was always very savvy with money his entire life and mine too, for that matter. So he started teaching me lessons about how money works and how to make money work for you when I was pretty small.
Share
06:15
And I want to say I was probably five or so the first time that my dad started borrowing money from my piggy bank and if he didn't have cash on him, he'd borrow money from me to take my mom out for dinner or whatever, and pay me back the next day or a couple of days later with interest.
Share
06:34
So I remember clearly one time him borrowing $100 bill from me and giving me back $105, and that really lit a fire for me. And after that it was continuously, you know, "Hey dad, do you need to borrow any money? Because I'm flush with cash over here", and figuring out that I could make money just by having my money, so as long as I didn't spend it on other things so it's available for those little loans, I would end up with more and more.
Share
07:04
And when I had my first job when I was 15 years old, you know, he started talking to me then about how to set aside however much I wanted to for my retirement, which seemed crazy at 15 to be thinking about retirement, but he started those conversations early, that the sooner that you start working on this and as soon as you start saving, the easier it'll be for you later. So I had my first
Roth IRA
when I was 15 years old and I've been working on expanding that literally ever since.Share
Samantha Barry
07:37
Audra worked as a purchasing manager for a home builder after graduating with a degree in construction management. Through her 20s, as her salary grew, she kept her lifestyle consistent and her spending minimal while steadily increasing the amount she was saving.
Share
07:54
By age 28, she had $100,000 in investment savings. Her salary at the time was around $65,000. While she knew she was lucky not to have student loan debt, she didn't realize how far ahead of her peers she was.
Share
08:11
It felt at the time like we were all kind of swimming in the same ocean and had the same struggles, and I think I also assumed that more people were doing more than they were. We didn't discuss it a lot, but I thought that I knew that everybody saved at least a little, even though I probably do a little more.
Share
08:30
And I've learned since then that that's really not the case, and that that was really when things started to change, I guess, in terms of a difference between me and the people I was close to, even though I really wasn't aware of it at the time.
Share
08:46
More on She Makes Money Moves right after this quick break.
Share
Break
Samantha Barry
09:22
I'm
Samantha Barry
welcome back to She Makes Money Moves.Share
09:26
When Audrey lost her job in 2008, she decided to start her own home renovation business with help from investors. In 2016, she relaunched the business with no outside money. This year, Audra expects that business to make $3 million dollars in gross revenue. But despite her company's rapid growth, Audra has continued to keep her living expenses modest.
Share
09:48
I think it would surprise a lot of my friends that up until literally last year I was living on 70K a year pretty easily and still even within that being able to save quite a bit of money. And everything that I earned in excess of that I put directly into my brokerage accounts, to work towards my goals of expanding my business as well as building my dream home.
Share
Samantha Barry
10:13
While Audrey's very comfortable financially, she knows that's not the case for all of her friends.
Share
10:18
I try to be generous where it's appropriate, and when I go out for dinner or go out for drinks with friends who I know are struggling, you know, just had a baby or are having their own financial situation that I'm aware of, or even some people that I know it's just on the income that they have right now, going out for dinner and dropping 100 bucks is a stretch for them, I try to be generous and pick up tabs and do so in a lighthearted manner that, you know, "No, it's I got this tonight, it's my pleasure. I wanted to take you out".
Share
Samantha Barry
10:56
But her generosity and her growing business haven't gone unnoticed while people are around her. And occasionally her generosity with one friend has caused friction with another.
Share
11:06
I have had a couple of times where certain girlfriends have questioned kind of like, well, I see you pick up the tab for someone else or being generous with other people and it doesn't always seem like you're that way with me.
Share
11:22
I have on occasion had people come to me to borrow money or wanting me to help them out of a jam in some way, and I've always handled that the way that my dad taught me, which is never loan money to friends that you intend to get back.
Share
Samantha Barry
11:36
Though she's managed to maintain most of her friendships, Audra isn't exactly sure how to talk to her friends when the topic of money comes up. Whether it's asking for a loan or advice on their own finances.
Share
11:47
I've had to struggle through a lot of these things. So a lot of times when even when you're trying to offer something helpful or you know that you can help someone, it's hard to find the right words or learn how to communicate in a way where it can actually be received in a useful way.
Share
Samantha Barry
12:14
Like Sierra, Audra asked for advice on navigating her friendships while continuing to do what's best for her own bottom line. While they're starting their conversations 180° apart, the communication tools they'll need are actually quite similar.
Share
12:28
Today's expert has been in both of their shoes. At 22 she felt guilty every time she spent money, 10 years later she's the friend who has a handle on her finances.
Share
Stefanie O'Connell
12:38
Hi, I'm Stefanie O'Connell, author of The Broke and Beautiful Life, and I talk about all things work, worth and money for ambitious women.
Share
Samantha Barry
12:47
So Stefanie, let's start with Sierra. She's on $18,000 a year, she's clearly frustrated by friends who keep inviting her to join in activities that cost money. She's not alone there, it's a conversation I had when I was younger, it's a conversation women all over
America
are having. How do you make that conversation less awkward?Share
Stefanie O'Connell
13:09
Well, the first thing you can do is be the planner. If you're the one who says "Let's get together", you have more options to dictate what that looks like, whether that's a potluck or a walk in the park or something else that's really within your budget and within everybody's budget.
Share
13:24
And if she takes the reins on planning the activities, that makes it less awkward than saying someone planning already a dinner out and then you saying, "Oh, let's potluck". If you're setting the terms from the start, it's a little bit, creates a little bit less friction with your friendship.
Share
Samantha Barry
13:41
And what if she does decide to go out and she sets a $50 spending limit for herself, then she's after dinner with a group and somebody is ordering expensive wine and somebody else was ordering a load of sides, how do you say, "Guys, I just had a salad and a little bit of water here, I'm not going to going on the group check".
Share
Stefanie O'Connell
13:58
When you sit down when the waitress or waiter first comes up, you can just simply request separate checks right from the start. You can say, are you, are we good with doing separate checks? That way it's not as awkward as if the meal is already over and it seems like you're ducking out. No, because you've already set a precedent when we sat down.
Share
14:17
And then you can also just say, you know, I think "I'm just gonna get a water and salad, so I might just, you know, Venmo you 10 bucks if that works".
Share
Samantha Barry
14:25
What about somebody who's not drinking? Alcohol is definitely adding to the bill. You don't want to pay for the wine when you're not drinking. Can you say I want a separate group bill from the non-drinkers?
Share
Stefanie O'Connell
14:37
I think it's again right at the start, when you order the wine, "I'm gonna opt out of the wine. Is it alright if I just, you know, should I just get my own check or is it easier if I just pay cash?" Again, it's not being like, I'm not going to pay for your wine, it's being like, oh what's easier for you? Make it about framing it, what's easier for them rather than what's best for you?
Share
Samantha Barry
14:57
Sierra also mentioned weddings. Those can be a minefield financially for the couple getting married, but also for the guests. A 25-year-old, like Sierra, is probably going to be invited to a lot of weddings and asked to be in a lot of wedding parties. Can she say no without offending the people who love her?
Share
Stefanie O'Connell
15:16
So I think it's really important to understand what the bride's expectations are around wedding planning. And the way you do that is not to come at the bride with some kind of judgment about, you know, "What are you expecting me to spend on this thing?" It's more coming at her with excitement.
Share
15:32
"I'm really so happy for you, I'm so excited to celebrate. I would love to hear what you're thinking in terms of bachelor party, dresses, showers, anything, and I want to get my budget together so I can be there for as much as possible", and being really open and transparent about that. And framing the conversation then around what you can afford to partake in, rather than what you can't.
Share
Samantha Barry
15:52
Is there, this we're getting into dicey territory, is it okay for a bridesmaid to say that "My budget allows me to go to the wedding, but not the bachelorette"?
Share
Stefanie O'Connell
16:01
Absolutely. You know, we really back away from uncomfortable conversations and trust me, I understand. But we should be more uncomfortable about putting ourselves into further debt or putting ourselves into a precarious financial situation than we are about having a hard conversation with someone who should be one of our best friends.
Share
Samantha Barry
16:21
Do you think it's okay for somebody to say "I would love to be a bridesmaid, but I just can't deal with the extra expense, can I just be a guest at your wedding?" Is that also an okay conversation to have?
Share
Stefanie O'Connell
16:31
Absolutely. And you can also frame it around, what else could you contribute instead? Don't make it about what you can't do, because you bright or being you know too expensive. Make it about I care about you, I want to support you, but I need to do it in a way that aligns with my budget, so let me figure out how I can do that.
Share
Samantha Barry
16:49
That's great. So we've told her how to save money when she's out with her friends, we've told her how to save money as a wedding guest. But if her only income is from a part-time job that pays $11 an hour, it seems like saving a little bit here and there isn't going to get her very far.
Share
Stefanie O'Connell
17:03
Exactly. You can't out frugal you're way to rich, right? You can't just keep cutting and cutting and cutting. So I think it's really smart that she's built up the savings and is staying on top of her debt. What we need to see is her income going up because unless that happens we're not going to see forward progress.
Share
Samantha Barry
17:20
What if she just bites the bullet and moves to
New York city
? People who are hiring in New York city
might be overlooking her now because it's easier for them to hire the person who's already here, who can start tomorrow, who doesn't have to move and find an apartment.Share
17:35
Yes, the move would eat up a lot of her savings, but she could find a job in
New York
while she's looking for her dream job. At the same time she could try to find a side hustle in the film industry, so she's getting that experience while she's looking.Share
Stefanie O'Connell
17:49
If she does move to
New York city
, what a wonderful place to be doing a side hustle. If she's in videos, she could do wedding videos. There's just so many ways of using her creative skill set to earn money, but it's really hard to do that if she's only working part-time and she's living with her parents upstate, where there may not be as much opportunity.Share
18:09
Whereas if she's here, if she's working full time somewhere and then side hustling in a more creative capacity when she has the time, that's going to be a really valuable way for her to get the skills and experience and network that she needs.
Share
Samantha Barry
18:23
So if she has $10,000, is that actually enough? I know it's a lot of money, but I'd hate for her to underestimate the cost of rent or utilities or subway or even the cost of food. There are things she's not paying for now, and I just know personally
New York
is a very expensive city to move to.Share
Stefanie O'Connell
18:41
I think you're right that people tend to underestimate it, and I think there's an idea of, I've saved up $5,000 or $10,000, but we kind of picked that number out of thin air instead of actually speaking to people and then figuring out what their expenses were, how much they actually cost and then running the numbers.
Share
Samantha Barry
18:57
So she'll talk to her friends who live here about the high cost. What are the least expensive neighborhoods? How much is the rent? How much do they spend on groceries? We know that her parents are paying for her food right now, so she might not know how much they spend, but whatever it is, groceries are going to be more expensive in the city.
Share
19:14
She should talk to a few friends because everyone's rent is different and some rents will include utilities or the internet or gym in the building, and some will include nothing at all. Speaking of rent, when she does get an apartment, it's probably going to be unfurnished. Would a furniture rental company be a good option for Sierra rather than spending more of her savings, buying furniture?
Share
Stefanie O'Connell
19:35
They charge, you know, let's say 100 bucks a month for a piece of furniture, but you know, for $100 you could buy something used, yes, but you know, you want to make sure it doesn't have bedbugs. But other than that there's nothing wrong with buying secondhand furniture. And again, we live in
New York city
, there are a lot of people with a lot of money who are constantly just putting things into thrift stores. So go thrifting.Share
Samantha Barry
19:58
So renting furniture works if you want to try out an accent chair and see if it works in your living room, but not if you want cheap furniture, there's better options.
Share
Stefanie O'Connell
20:06
100%. The other thing is when you do make that move, you don't have to have everything in place all at once.
Share
Samantha Barry
20:11
Right, you don't have to move in with a full set of furniture. Make a list of what you need from the most important to least important. Put a bed right on the top of that list, because you should get that right away. But you know, for example, you can use a stack of books, is a nice stand until you get a full-time job and have more money for furniture.
Share
20:28
More on She Makes Money Moves right after this quick break.
Share
20:34
I'm
Samantha Barry
, welcome back to She Makes Money Moves.Share
20:39
So we told Sierra how to deal with friends who assume she has money to split the check. Let's talk about Audra. She's making six figures, she's super successful financially. But that success has led to encounters where friends don't just want to split the check, they expect her to pay the whole tab. What's going on there?
Share
Stefanie O'Connell
20:58
It comes around expectations maybe that your friends have a view because you earn more money. Maybe they feel like you should be the one picking up the check. I would say that nobody has any right to tell you how to spend your own money.
Share
Samantha Barry
21:12
Agreed. So if Audra wants to see a friend who once said she should pick up the tab, maybe with that friend Audra suggests they cook dinner together, so there's not that moment where the check comes and the friend is looking the other way and not reaching for her wallet. And when Audra wants a nice dinner out without that awkwardness, she can invite the friends out who never made it weird.
Share
Stefanie O'Connell
21:30
Sometimes it's not about the company you keep, sometimes it is about the activity. So you gotta think through both situations. If I want to go see
Hamilton
, I'm not expecting all of my friends to buy $600 tickets, but I have to be okay with going alone. If I want to go spend time with all my friends, I can go do something that works for all of their budgets. So you have to prioritize the activity or the company.Share
Samantha Barry
21:51
There's been times where I've wanted to go to to do things that come with a hefty enough price tag, right? Whether that's going to see
Hamilton,
or a really nice restaurant. But if I'm inviting a friend in that situation, I'll say going into it, it's on me tonight, it's my treat. But you don't want that to be the expectation, right?Share
Stefanie O'Connell
22:07
It's lovely to treat your friends. But if they are expecting you to pick up the tab every time you go, it's really not a good friend.
Share
Samantha Barry
22:16
Audra is obviously smart about money, and if she wants to help her friends and give advice, how does she do that without coming across as smug or condescending?
Share
Stefanie O'Connell
22:23
Two rules about financial advice. One, don't do it unsolicited. Two, don't do it judgmentally. So someone is coming to her and asking her advice about something, well, that's an obvious opportunity for her to share very honestly some of what she thinks and some of her experience.
Share
22:42
And a way of doing that non-judgmentally is by framing it through the lens of what's worked and not worked for her personally, rather than being prescriptive or judgmental about how that person is spending their money or saving their money or not.
Share
Samantha Barry
22:56
Right. You don't say "You don't have an investment account". You say, "This is how I opened my first investment account". Maybe if you're Audrey, you leave out that you were 15 when that happened, especially if the friend you're talking to is 35 and getting a later start.
Share
Stefanie O'Connell
23:09
Exactly.
Share
Samantha Barry
23:10
So instead of putting her money into a savings account, Audra invested it and had $100,000 by the age of 28. Should our listeners be investing instead of saving, what buckets should they be putting their money in?
Share
Stefanie O'Connell
23:22
Put the emergency fund first. It's that important.
Share
Samantha Barry
23:24
We talk about that all the time at
Glamour
, that fallback fund. If you lose your job, if you need to leave a lease, if you need to leave a relationship. That's so important for every woman out there, that fallback fund, right?Share
Stefanie O'Connell
23:35
Absolutely. And then I'm going to go into the high-interest rate credit card debt. And obviously you want to be making your student loan payments, also making those minimum payments. And then once you're on top of those things, you've got a financial foundation in place, and you can start looking at things like your employer
401K fund
. And that's when we're talking about the investing, that's when we're talking about the long term.Share
23:54
And I love how aggressive Audra was and getting all that $100,000 saved. You know, the benchmark is having a year of your salary saved by 30 in retirement funds. That, for a lot of young people today isn't possible because of the student loan debt burden. But it's just a good thing to keep in mind to think about how aggressively we should try to target those long-term savings.
Share
Samantha Barry
24:18
So the buckets are pay off debt, establish a fallback fund and invest long-term for retirement. For a lot of women we've talked to, once they've started learning pretty soon they feel financially literate when it comes to those first two buckets. But the learning curve is much steeper for investing, they're intimidated. What's your advice for those women?
Share
Stefanie O'Connell
24:38
Well, start with the resources you already have at your fingertips if you are traditionally employed and you have access to an employer-sponsored retirement plan, that's investing. If you can max out the
401K
, you have an HR rep, they hand you the paperwork, they basically do it for you. Take advantage of that resource, it's a such a wonderful thing to have and I'm jealous of anyone who has it because I never did.Share
25:02
So if you're self-employed, you have to take the reins a little bit more yourself, or your working freelance, or you're between jobs. This is when you want to start exploring things like setting up your own
Roth IRA
or your own IRA. You learn about investing by doing it.Share
Samantha Barry
25:19
So whether you're a Sierra or an Audra or somewhere in the middle, our best advice is to talk to your friends about money. Tell them your salarym what you pay in rent, and how you ask your boss for a raise.
Share
25:34
You talk to your friends about sex, you talk to your friends about period cramps and embarrassing family members. The only way to make uncomfortable conversations less awkward is by having them over and over and over again.
Share
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