Judging how much to spend on the perfect present for your friends at Christmas is hard, especially when there is a disparity in what you earn.
As the festive season kicks off, the difference in income between friends ‘can become more evident than ever’, according to loan company Finbri, which found Google searches for “friends have more money” rose by 1085% in November.
So, to make this time of year as pain-free as possible on your finances and friendships, an expert from the loan company has urged people to be careful when dealing with a ‘friendship wealth gap’ this festive season.
It follows a separate study by Atom Bank that showed Brits would rather chat about politics, health, religion, and sex matters, before their financial matters.
Just 15% of people aged over 55 were willing to speak to friends about their cash – compared to over a quarter (26%) of 18 to 34-year-olds.
Without having an idea of how each other is coping financially, the expectations over what a group of friends can afford – present or activity-wise – could be wildly different. This is heightened by the cost-of-living crisis – which has already hurt friendship groups – as households on high and low salaries cope with rising bills, mortgage payments and rent rates.
Keeping up with friends ‘can be dangerous’
A knock-on effect of not discussing these expectations could lead to splashing out way beyond your means and going into debt, just to keep up with your friendship group.
Finbri’s money expert Georgia Galloway outlined five steps to ensure you do not spend more than you can afford this December while avoiding any awkward encounters along the way.
Galloway said: “From the struggle of what to buy for the friends who have everything, to disagreements of where you should go (and how much you should spend) on New Year’s Eve, the festive period can be a battle to keep up with your friends, especially if you don’t earn as much as them.
“Trying to keep up with them can be dangerous, as it can lead to you putting things on a credit card to match their spending energy.”
Five tips to navigate a wealth gap with your friends
Don’t compare yourself
The friendship wealth gap can be a huge source of stress at this time of year, and it’s very easy to start comparing yourself to your friends, strangers online, and even your past self if you’ve had a recent drop in income.
Comparing yourself to others can give you a distorted perception of your own financial situation. Even if you’re doing well, focusing on what others have can make you feel like you don’t have enough, but everyone’s financial situation is different, and it’s unfair to compare.
Acknowledge the gap
The first step in bridging the wealth gap is acknowledging its existence; pretending it’s not there can lead to tension, embarrassment, and resentment. It’s important to have an open and honest discussion about the differences you’re feeling. Talk to your friends about your money worries, and encourage them to do the same. You might be surprised by their financial situations, too – they could have been feeling the same way but have been unsure how to bring it up.
Set a budget for gifts, activities, and nights out, that everyone is comfortable with. Setting realistic expectations is the best way to avoid anyone having feelings of guilt or inadequacy. Be specific about what you can and can’t afford. For example, you might be able to afford to go out for a group dinner but not buy a gift for everyone, or you might be able to suggest Secret Santa, so you only have to buy one gift.
It’s important to make sure that the whole group will stick to the budget that you’ve chosen; it can be uncomfortable for everyone if one person goes above and beyond, no matter how grateful the recipient might be.
Get creative and give alternative suggestions
Instead of material gifts, focus on creating experiences with friends instead. A scaled-down festive season doesn’t have to mean doing nothing at all.
If you do still want to exchange gifts, however, suggest that all gifts have to be second-hand or homemade – this means you can all spend a day thrifting or crafting together. You could also suggest that you gift each other with a helping hand with your time or skills; from promising a few evenings of babysitting to helping out with their side hustle business one weekend.
Don’t feel obligated
Don’t feel like you have to spend money, just because you always have done in the past. Maybe you have always gone out for an extravagant night out to celebrate New Year’s Eve, but you know your budget can’t stretch to it this year, don’t be afraid to decline the invitation. Your friends will understand – and might be feeling the same way – so will be happy to make a different, less expensive plan.