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Few things are as important as our relationships with friends and family. The last thing you want is for money issues to get between you and your loved ones. While it’s a wonderful thing to be there for a friend, awkward money dilemmas can put your relationships in jeopardy if you aren’t careful. Here are a few common situations you may encounter, and ways to handle them.

1. When It’s Time to Split the Check at a Restaurant

It’s always a great time sharing dinner at a favorite local restaurant … that is, until the bill comes. Inevitably, the person who ordered the most expensive entrée on the menu will suggest splitting the check evenly, even though you only ordered an egg roll and a cup of coffee. To avoid this situation, discuss payment before dinner. Be honest with your friends and say, “I’d love to come, but I’m on a tight budget this week, so I’ll probably just order something small.” If you’re still concerned, ask your server for a separate check before you place your order.

2. When Friends or Family Members Ask to Borrow Money

While it’s OK to lend money to friends in need, it’s important to consider what happens after you make a loan. The biggest consequence of friends or family members asking for a sizable loan is simple: it changes the dynamic of the relationship. As a lender, you may feel you have a right to judge the borrower about how they spend the money or how long it takes them to repay the loan.

It’s important to understand you don’t have to give your friend an answer right away. Let them know you need to think about it. If you decide to loan the money, make sure you are prepared for the possibility that you won’t get it back. To avoid this situation entirely, try explaining, “I have a policy to never loan money to friends, but I’d like to help.” Then, offer to babysit while they go on a job interview, invite them to dinner, or if you’re able to, give them a financial gift, rather than a loan.

3. When Friends Invite You Out for High-Cost Activities

While it may seem like you’ll lose friends if you simply turn down invitations to expensive nights out or weekend adventures, having a social life is possible – even on a budget. If you’re living within your means, and trying to save money or pay down bills, honesty is the best policy. Explain that you have financial goals you’re working toward. Then, invite your friends to low- or no-cost events like street festivals, gallery openings, or potluck dinners at home.

4. When a Friend Owes You Money

Friendships are built on trust. That trust is tested when your friend owes you money and isn’t quick to reimburse you. You have every right to ask about repayment – and you shouldn’t feel bad for doing so. Here’s one way of politely dealing with the situation: If you bought concert tickets with your credit card, but your friend hasn’t paid you back, you could say something like, “That was a great show – and so much fun to go together. By the way, your part of the bill for the tickets is …”

5. When Someone Asks You to Co-Sign a Loan

A recent industry poll revealed that almost 40% of co-signers have at some point ended up paying a portion of a defaulted loan. And even if your friend never misses a payment, you could end up noticing a hit to your credit score, which could prevent you from getting a loan of your own. If your friend defaults, not only will you have to cover the loan, but the friendship will likely suffer. Avoid the issue altogether by discussing the situation and saying, “I am so sorry, but if something happens and you can’t pay, I’m not able to cover for you.”

KNOW WHERE YOU STAND

Understanding your own financial situation and your financial goals can help you decide how to handle awkward money dilemmas involving friends and family. It can also help you gain the confidence to stand up to financial peer pressure. American Heritage Credit Union is here to help you take charge of your money with solid advice and the right savings accounts, credit cards, loans, and more – no awkward conversation required. Contact us today to learn more.