Splitting the Bill: How to Deal with Money in Friendships

Keep your resentment in check.

A quick note: this is my second-to-last “big” essay on Money and Relationships for the month of January. I have one more on how the financial system gaslights single people, but I’m not sure that’s ready for your eyes. We’ve covered money in romantic relationships and money in families. Next week, I’ll introduce a column I’m really excited about called “Am I Saving Enough?” so all you voyeuristic creeps can get your rocks off ogling someone else’s balance sheet. I say that with love 💖. - Ally Jane

Key takeaways:

• Be transparent and honest: Talking openly about money with friends can reduce misunderstandings and resentment while strengthening your relationships.

• Set clear boundaries: Whether it’s splitting bills or lending money, establish expectations and communicate your financial limitations to avoid conflicts.

• Prioritize your future: Before lending money or overextending yourself financially, consider the long-term impact on your goals and well-being.

As I (reluctantly) mature into full adulthood, I’ve been reflecting on friendships—who’s stayed, who I’ve lost, and the surprising new ones that have brought sweetness to my life. If I’m honest, I feel more secure in my friendships than ever; they are precious to me.

But recently, I read an Atlantic piece by Ellen Cushing called “Americans Need to Party More.” The gist? Friendships are dwindling, everyone’s lonely, and we should throw more parties to see each other. The stat that stuck with me: one in eight Americans reports having no friends¹.

It made me think about the barriers to deepening friendships—and why some end. Time, distance, and life changes are the usual suspects, but we don’t talk enough about money. Whether it’s the awkwardness of splitting a check, navigating income differences, or quietly struggling to keep up, money sneaks into our friendships in ways we rarely acknowledge.

And the silence around it? The awkwardness?

That just makes it worse.

Talking about money: the last friendship taboo

Just like a marriage, friendships evolve—and so does the role money plays in them. Maybe it started with borrowing $10 for late-night pizza in college. Now it’s about who’s putting the $5,000 Airbnb on their card or covering extra childcare during a night out. The stakes are higher.

If it’s a college friend, perhaps you started in the same place financially—your wealth or lack thereof obfuscated by the great economic equalizer of the college dorm room. Let’s fast-forward to a few years later: one of you became a lawyer, and the other became a social worker. Ten or twenty years after graduation, your financial lives probably look very different.

Think about your two closest friends. You know where they live, their favorite foods, the gory details of their family drama, their work frustrations, their preferred nail color and lipstick shade², and maybe even the last three people they’ve slept with³.

But do you know how much money they have? Have you ever asked? Do they have debt? Is their lifestyle supplemented with gifts from their parents?⁴ Would you share your tax return or bank balance with your friends? My guess is no.

So, what are we afraid of?

Why we don’t talk about money

Is it the fear of judgment? If you’re struggling financially, will your friends think less of you? If you’re doing well, will they resent you for not sharing more?

We’ve been trained to avoid these conversations. Money talk is “impolite,” “gaudy,” or just plain uncomfortable. But silence breeds misunderstandings. It’s why we read horror stories about friendships imploding: the bride who made her guests pay for the wedding or the roommate who “didn’t use heat” and refused to pay the bill.

Is your friend rich?

Think of the wealthiest person you know—not a celebrity, but someone in your actual life. How much money do you think they have? Chances are, you’re off by millions. Some people quietly accumulate vast sums of wealth. Others live extravagantly but are secretly broke. Most of us fall somewhere in between.

Money is one of those topics we just don’t talk about, and when we do, it often stirs up insecurities or assumptions we didn’t know we had. What if you started introducing money into conversations with the people you trust? You could talk about investments⁵, share your financial wins, or even your mistakes.

In my work as a financial advisor, I’ve seen newlyweds reveal their debts and savings for the first time. I’ll never forget the husband’s stunned reaction when he saw his wife had $200,000 in her checking account. “Why didn’t you tell me?” he asked. She said, “I was embarrassed. I didn’t want to make a mistake with my savings. I didn’t want you to think about me differently.”

And there it is—that’s why we don’t talk about money. We’re afraid of how it might change our relationships. Afraid of disrupting the power dynamic, disturbing the peace, or just making someone uncomfortable. I’ll be the first to admit I don’t want people asking me for things because I don’t want to be put in the uncomfortable position of saying no.

The only way to break through these misconceptions is by introducing money into conversations with people you trust. Share your worries about money like you’d share a bad date story—with humor and honesty. You’ll quickly realize you’re not alone. Isn’t it such a relief when you learn someone is going through the same miserable shit you are?

Splitting the bill

Ever been out with a friend you know has more money than you and resented splitting the check? You’re at a fabulous restaurant, enjoying the company—until the $175 bill lands. You can afford it, technically, but it stings when you’re saving for a down payment.

Your friend casually tosses down their thick metal Platinum Amex. “Split?” they ask, or, “I can cover, and you can Venmo me.” You opt to split, but as you put your own debit card down, a nagging voice creeps in: Why don’t they just cover it? They know I’m trying to save. You notice their designer clothes and their double-income household, and you start slipping into judgment mode. Then you remember—didn’t they say they’re supporting their mom financially? Their bonus was smaller this year, and they have a hefty mortgage.

We all carry financial baggage. The key is to stop judging and start talking. If splitting the bill feels like too much, say so:

“I loved this dinner, but I’m saving for an apartment. Next time, let’s pick a cheaper spot?”

Generosity is wonderful, but so is honesty. A little transparency can go a long way.

I’ve been on both sides of that transaction and trust me, everyone’s got their own shit to work through.

Lending money to friends: it’s just business

How generous should you be? Picking up a dinner tab is one thing, but loaning a friend $10,000 to pay off debt or cover preschool tuition? That’s a moment where your heart and your head might be at odds.

Your instinct to help is noble, but a personal loan—even to your closest friend—can get messy if it’s not handled carefully. You MUST consider your own financial position. Can you truly afford to lend this money? What are the costs to you? It’s not selfish to think, “If I do this, I won’t be able to contribute fully to my 401(k) this year.” If that thought crosses your mind, don’t do it. Trust me—you can’t afford it.

Let’s start with the technical side: the IRS requires you to charge at least the Applicable Federal Rate (AFR) on personal loans, even with friends or family. Skip this, and you could end up taxed on phantom interest. Even if you think, “I’ll do this interest-free to help my friend,” the tax bill could surprise you.

Beyond taxes, there’s the emotional fallout. If your friend is late with repayments, will you feel disrespected? If they spend lavishly while owing you, will you feel resentful? What if they never pay you back?

If you decide to lend money, treat it like a business transaction—not because you’re cold, but to protect the friendship:

• Put it in writing: Draft a simple agreement outlining the loan amount, repayment terms, and interest rate (even if it’s just the AFR). Include an amortization table so expectations are crystal clear. For example: Jamima borrows $5,000 from Freddie with a 5-year repayment term at 5% interest. The first payment is due on 6/1/2025.

• Set boundaries: Be upfront about expectations. Is this a one-time loan? What happens if they miss a payment?

• Only give what you can afford to lose: Approach the loan as if you might never see the money again. If losing it would harm your finances or friendship, rethink the offer.

And sometimes, the best answer is, “I can’t lend you money, but I’d love to help in another way.” Generosity doesn’t always mean cash—it can be emotional support, problem-solving, or connecting them with resources that might help.

You will hear this refrain from me often: think of your future first. It’s a hard thing to do. Think about an unknown moment in time decades from now when you might want to have more money than you do now. By that, I mean make choices that benefit you and that set you up for the highest likelihood of success.

In this case it means DON’T lend your friend money, doing so could truly harm your future. Not saving that money and letting it grow will have an impact on your ability to support yourself. Unless, of course, you already have a lot of money, more than you could ever spend in your lifetime, then maybe you are going to be a great friend and go ahead with a desperately needed loan - heck, maybe you should even forgive the loan after they’ve made a few payments. But I’m guessing most of us are not in that position YET. So instead, offer to help them fill out the paperwork for a personal loan that will almost certainly be at a higher interest rate. That’s okay. It’s probably not worth jeopardizing your future and your friendship.

Money doesn’t have to ruin friendships

I don’t know about you, but every time I’m in a fight with my husband, business partner, parent, or friend, I can usually trace the cause of the fight to one thing: resentment. I resent a friend for canceling plans at the last minute and wasting my time. When it comes to money and friendship, resentment is often the root of all fights.

Resentment comes in 31 flavors, here are the ones I see the most often.

“I can’t afford to do that with you.”

This flavor of resentment stems from feeling left out or pressured because a friend suggests plans you can’t afford. Of course, you’d love to go out to a steak dinner, you just don’t have room in your cashflow right now. Now you feel bad that you aren’t an easygoing spender and get sad because you actually really could use a fun steak dinner.

How to work through it: Be honest and upfront. Say, “I’d love to hang out, but I’m on a tighter budget right now—can we plan something low-cost?” Most of the time, your friend will appreciate the transparency and pivot to something that works for you both. If they don’t, it’s a sign to reevaluate whether they’re one to keep around. Propose a walk–who isn’t trying to increase their step count? Explain why it’s important to you—whether it’s saving for a goal or just avoiding the stress of overspending. Most people don’t realize their default plans might be financially draining for others, and a gentle nudge can go a long way.

“You owe me money.”

Few things breed resentment faster than unpaid debts between friends. Whether it’s a small unpaid Venmo request or a significant amount for a hotel you shared on a trip, the unspoken tension can chip away at trust.

How to work through it: If you’re the lender, bring it up directly but kindly: “Morning! I wanted to check in about that $50 from last month. I know things get busy, but let me know when I might expect it.” (Notice how you’re not demanding it now, you’re just asking for a realistic timeframe.) If you’re the borrower, acknowledge it without waiting for a reminder: “I haven’t forgotten about what I owe you, and I’ll make sure to pay you back by [specific date].” Clear communication and follow-through are the keys to avoiding long-term damage.

“I feel like I’m always the one treating, and you never offer.”

As I said earlier, it feels good to be generous. But when it starts to feel one-sided, resentment can creep in, especially if your friend doesn’t seem to notice or offer to return the favor.

How to work through it: Start by checking in with yourself—are you treating because you want to or because you feel obligated? If it’s becoming a pattern, bring it up gently: “I love being able to treat sometimes, but I’m realizing I’d really appreciate it if we took turns.” If outright asking feels awkward, set the tone by suggesting shared responsibility: “How about I grab this round, and you get the next one?” Most friends aren’t intentionally taking advantage—they just might not realize how the imbalance feels to you.

Money fights aren’t forever

Friendships can end over money disputes, most often around weddings. More on that in a future issue. But I firmly believe that fights over money are not deep wounds and can be healed.

Insult someone’s partner? Oh, you’re probably never speaking again.

Embarrass someone at work? Sorry, don’t expect any favors.

Flirt with your friend’s partner or brother? Goodbye friendship!

Get in a fight about attending a bachelorette trip? Wait six months and reach out with an apology, even if you’re not in the wrong.

Think about the money fights you’ve had with friends over the years. Is there anyone on that list that you regret ending things with? Do you miss them? Would it be the worst thing in the world if you reached out?

You can hang out without spending money

I hate the idea that saving money means you can’t be social. I think of the FIRE movement and how extreme savings goals can cause certain goal-oriented young people to avoid any interaction that costs money. If you can’t afford the girl’s trip, make sure three hangouts in the park get scheduled instead. The Surgeon General’s warning is ringing in my ears: “About one-in-two adults in America reported experiencing loneliness.”

Start the conversation

Money is f*cking complicated. It impacts every part of our lives—our friendships, our families, our relationships.

Share your money fears with friends like you would a run-in with your arch nemesis at work. Be open, be honest, and know you’re not alone. The more we normalize talking about money, the stronger our relationships will become—and the richer, in every sense of the word.

Parting shot: Friendships are priceless. Invest heavily in them.

The best $20 bucks I spent this week: A small fee to adjust my flight to leave a day earlier for California to escape the freezing cold New York winter. $5.00.

1. The study in question.

2. OPI’s “Lincoln Park After Dark” and Fluffmatte’s “Nudist” if you must know.

3. What do men know about each other in friendship? What are their favorite sports teams? Who is winning fantasy football? Boobs or butts? I have no clue.

4. We covered this in detail in a previous issue called “Do we have secret family money?”

5. By the way, women have a long and rich history of starting investing clubs. I find the story of the Beardstown Ladies particularly interesting.