‘There were a lot of red flags’: This 33-year-old California woman made a tough call after her friend stopped paying her share of rent — here’s when you need to end a friendship over money

02/07/2024

When You Need to End a Friendship Over Money

When Chelsea McQueen’s close friend was dealing with the aftermath of a bad breakup, helping her friend land a job at her workplace and letting her move into her apartment seemed like a no-brainer.

“I feel like I'm such a giver that if a close friend of mine tells me that there's something that they really like, or [needs help with their rent], I would love to be able to be that person that gives it to them,” McQueen, a 33-year-old account associate at a California-based communications agency, tells Moneywise.

Don't miss

Cost-of-living in America is still out of control — use these 3 'real assets' to protect your wealth today, no matter what the US Fed does or says
Car insurance rates have spiked in the US to a stunning $2,150/year — but you can be smarter than that. Here's how you can save yourself as much as $820 annually in minutes (it's 100% free)
These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how

McQueen explains that she and her friend were earning the same salary and her friend initially agreed to the breakdown of rent and other costs before moving in with her in 2016.

“Maybe the first month or two, it was good,” she recounts, noting that, soon after, her friend failed to pay her share of the bills on time, leading McQueen to cover the difference. “After a while, it got to a point where I knew I was stretching myself too thin.”

The breaking point transpired after her friend had her car repossessed three times — each time, turning to McQueen for help. The roommate relationship lasted for little more than a year-and-a-half and McQueen ultimately decided to break off the friendship.

“In retrospect, there were a lot of [financial] red flags just kind of throughout our entire friendship that I ignored,” she admits.

When money can play a role in a friendship breakup

Finances can come between friends more frequently than you’d think — a survey from Bread Financial reveals more than 20% of Americans have lost a friendship over money, while more than a quarter (26%) admit they’re financially incompatible with their friends.

The study discovered that failing to pay back borrowed funds was a major factor behind tensions in these relationships, but there are other situations where money can create bad blood between pals as well.

Nearly two-thirds of respondents admitted to breaking their budgets to socialize with friends — and more than a third say they’ve splurged due to influence or pressure from friends as well. But what happens when you refuse to compromise on your finances for a fun outing?

*Alex (whose name has been altered to protect her confidentiality), a 25-year-old woman who works in public relations and communications, says one of her friendships gradually fell apart after a pricey bachelorette trip she couldn’t afford to attend.

A recent graduate who had just been promoted out of her first internship, Alex explains that she initially didn’t understand just how much the trip would cost — but later realized she’d have to cough up more than $2,000 to go. She adds the other friends in the group were older and perhaps more financially stable than she was at the time.

When Alex made the tough decision to tell her friend she wouldn’t be able to afford the bachelorette trip, she was taken aback when the bride informed her she had other friends who were taking on side gigs — like walking dogs or babysitting — so that they could join, implying Alex could do the same.

“It was a little jarring for me,” Alex recounts. She says she tried to remain friendly in the aftermath, but a year after the wedding, realized the other woman wasn’t putting in any effort to retain the friendship and decided to let it go.

How to be open with your friends about finances

Lindsay Bryan-Podvin, a behavioral finance expert and consultant to Bread Financial, says it’s key to have open and honest dialogues around money, as opposed to pretending it doesn’t exist and letting it become a sore spot in your relationships.

Bryan-Podvin says some people may experience “anticipatory anxiety” when it comes to having the conversation around finances. “But what we know is that when people talk about money, they can feel closer to their friends about money.”

She says issues can stem from uncertainty and not being clear in your communication — like not letting your friend know it might take you some time to repay money that you borrowed. Or, planning a vacation without having a set budget for the costs of activities and lodging.

When it comes to financial compatibility, Bryan-Podvin believes it’s less about having a similar income, expenses or even spending habits — and more about being aligned in how you value your time together when money is a barrier.

For example, if you’re on a budget or saving for a personal goal and decide you can’t afford to meet your friend for their birthday brunch, but feel comfortable asking if you could do a low-cost activity or go on a walk in a park instead.

Alex agrees, noting that this aspect of financial compatibility is what matters in her own friendships today. “I think generally if both individuals are very open and honest, I do think that you can make it work even if you are working with vastly different budgets.”

McQueen also notes that, in their 30s, she and her friends feel much more comfortable discussing money than they were in their 20s — and are more understanding about each other’s financial situations too.

When you need to break up

Of course, there are situations where you can only have so many conversations — especially if you’re not being heard.

McQueen tried asking her friend multiple times over the course of their living situation whether there was an underlying issue with prioritizing budgets or if something else was going on and holding her back financially, but says she never received a solid reason.

Bryan-Podvin explains that a friend who is taking advantage of you or not respecting your financial boundaries isn’t really a friend at all.

“You need to protect not only your emotional peace, but also your financial peace,” she advises. “Just like we wouldn't tolerate a friend who is toxic to us in their communication style or who we feel like uses us for rides or for leveraging our network.”