How to handle financial inequality with friends and family

Do your friends and family earn more (or less) than you? Let’s talk about when financial inequality arises in your personal relationships.

Back when I lived in Brooklyn, I used to be in a band with a guy who was wealthy. He could afford to pay for our rehearsal studio, and hired a real producer to produce our demo, all without asking the rest of us to chip in. (And this was a producer who worked with bands you’ve heard of.)

One day, he said he was moving to Williamsburg to be closer to the action. But unlike my 300 sq. ft. hovel up in Greenpoint, he had purchased a two-bedroom condo right on N. 6th for something like $1.2 million (in 2000s money).

I went over to his new place once, and the anxiety for me was so palpable that it stuck in my throat. I felt so out of place, I didn’t want to touch anything for fear of taking the shine off it. Just being there kind of made me want to die, with a combination of jealousy, envy, and deep loneliness.

He, however, was gracious, and if he and his wife ever felt any socioeconomic dissonance in our relationship, he never showed it.

Okay, that’s a kind of extreme situation. But what about the more mundane?

Has this ever happened to you? Your friends invite you to a getaway in the Bahamas (or Hawaii, etc.). But the flights are double what they normally are, and your “share” of the house would be way out of your financial comfort zone.

It probably didn’t feel good. So how do you handle that?

Inequality on a personal level

Everyone knows that wealth inequality is happening in our country (they might just disagree on whether it’s a problem). There are plenty of charts to show this, but here’s one I like:

Between 2007 and 2022, wealth has declined for everyone except for those in the top 20% of net worth:

But you can read more about wealth inequality here and here.

These are issues on a country-wide scale, but it also trickles down to a personal level too.

Because while we tend to self-sort our communities based on political persuasion, income, and wealth, we still encounter people—either our friends or family—who are operating on a different financial level than we are.

Perhaps you’re working full time and make a good living, while someone you know is going to school and not making much at all. Or, maybe someone else you know is a hotshot executive and makes more month in a month than you see in a year.

I have people in my life who fit both of those categories right now.

Personal financial inequality feels bad

I remember how it felt when a friend of mine was having a destination wedding in Florida and invited me and all of my friends to go. I could no more have afforded it as I could have stepped in and gotten married for him. It was just impossible at that time.

And while he said he understood, I think it was a subtle rift between us, and over the years we drifted apart.

But I know it the other way too. The feeling of wanting to book an expensive trip with some friends, but also feeling like there were some people with whom I couldn’t mention it to, because I knew they couldn’t afford it and I didn’t want to make it weird.

It doesn’t have to be weird or hard though. No matter which side of the economic situation you’re on, here are some ways to make these awkward situations less challenging.

What to do if you’re less financially able

If you’re the one being invited to things that feel like you’d need to rob a bank to be able to afford, here’s how to handle it:

• Do only what you can do. I know you want to be part of the gang, but if you can’t afford something, going into debt is not going help you. Yes, you’ll be part of the gang now, but you’ll be more stressed and even less able to do things in the future.
• Be honest. If you’re invited to something that you can’t afford, tell the truth. Say: “Thank you so much for the invite. I would love to join, but this is out of my price range. Let’s try for another gathering another time!”
• Don’t make it weird. I know that envy can be a very strong emotion, but for the health of the relationships involved, try to not have an emotional reaction to the situation. Don’t get angry at people, don’t freeze them out, don’t get passive aggressive, and don’t put your financial situation on them. Otherwise, you risk damaging the relationship, which serves no one.
• Suggest your own ideas. If you can’t afford what the crew is suggesting, can you take ownership of a future event that’s more in your range? Maybe you sit this one out, but you invite everyone to a camping trip, or a hike in the woods, or maybe you host a dinner at your home. Get creative, and show an effort, and that will matter more than how much you’re able to spend.

What to do if you’re more financially able

I also have some tips for you if you’re the person who has the ability to do more expensive things than the people around you. After all, you play a role in this dynamic too.

• Don’t flaunt. This is a good rule of thumb in general. Recognize that there are people who are struggling financially, and while it’s great that you’re not, acting in a way that seems like gloating won’t ingratiate you to anyone.
• Be gracious. If someone tells you that they can’t afford something, respond with grace. Make sure they know that your relationship is important to you, and that it isn’t defined by how much you spend. Remember that the tide could be turned one day (or maybe once was).
• Consider how to be more inclusive. There is nothing wrong with embarking on an experience that others cannot afford. But all the same, if you wish to include others of varying financial abilities, perhaps consider how you could suggest something with less barrier to entry in the future. I’m sure everyone around you would appreciate it.

Financial inequality doesn’t have to affect your relationships

It can be hard when your friends and family make more (or less) money than you, or just have more (or less) ability to do things.

But it doesn’t have to affect your relationships. Just remember that, when it comes down to it, the important part of the relationship is the quality time and effort that you put in. While money can make things easier, keeping a connection with someone going doesn’t really require any money at all.