The Wealth Gap Between Friends: Navigating Finances And Income Disparities
Forming friendships with people in different life circumstances can be more challenging than connecting with those similar to yourself. This difficulty may be particularly pronounced in friendships across a socioeconomic divide. Money can be an uncomfortable subject of conversation, and relating to someone in a different financial position can be tricky.
Some may wonder if it is possible to maintain a strong friendship despite a significant wealth gap. Keeping friendships healthy across social strata often involves effort and care. Friends might make a change by facing up to some of the uncomfortable feelings and social dynamics that financial issues can provoke. By learning to communicate openly about budgets and emotions while refraining from unjustified assumptions, you may keep differences in wealth from derailing your connection.
Are financial disparities amongst friends common?
While making friends with someone who makes significantly more or less money than you do is possible, research suggests this situation may not be the norm. A sociological study from 2021 found that as income inequality has increased in the United States over the past several decades, socioeconomic stratification has grown as well. In other words, fewer people today are friends with those at different levels of wealth than before.
This phenomenon may not be limited to the US. A 2016 paper found similar results in Mexico, noting that people tended to be more closely connected with others in their own socioeconomic class.
Why people are more likely to make friends with similar finances
Friendships cluster along socioeconomic lines for a few reasons. Some of these reasons concern the pragmatic realities of daily life, while others are driven by the complicated feelings and thoughts people may have about money, status, and privilege.
Proximity
Since home prices and living expenses can vary considerably between neighborhoods, people living in the same place may have similar financial resources. This effect may be exacerbated by the tendency to treat homes as investment assets, which may lead to greater clustering of wealth in specific areas. As such, people may interact more with those with similar fiscal resources, making forming friendships easier.
Educational similarities
A 2022 study found that as people age, more and more of their friends tend to be people with similar levels of education. This statistic may be due, in part, to a tendency to share ideas, beliefs, cultural references, and life experiences with people who have the same educational background. Since education level has a significant effect on earning power, this tendency may naturally lead to people mainly having friends with similar incomes.
Access to leisure activities
People often make new friends based on shared hobbies and interests, but a person’s wealth may affect their leisure activities. Someone whose primary forms of recreation include costlier activities such as sailing and skiing may be less likely to meet people who can’t afford these hobbies.
Prejudice
Some people harbor negative stereotypes and assumptions about people from other economic classes that can make friendship difficult. For example, a person who views wealthy people as clueless, greedy, or uncaring may be less likely to seek out friendships with them. The same may be true for someone who assumes those with less wealth are unintelligent, unmotivated, or prone to bad behavior.
Wealth gaps can place a strain on existing friendships
In addition to making new friendships less likely, disparities in wealth and income may drive a wedge between people who are already friends. A financial divide may add a variety of new pressures to a relationship, including but not limited to the following:
- The person with less money may become envious of their friend’s wealth
- A friend who’s recently become wealthier may develop a new group of friends and leave their old circle behind
- The person with more money might develop a condescending or rude attitude toward the person who’s had less career success
- Wealthier friends may be less able to relate to the everyday challenges faced by those with lower incomes
- Money-related conflicts may arise when trying to plan activities — for example, a higher-earning individual may want to meet up in expensive restaurants or bars that their friends can’t afford
- The lower-earning person might expect their wealthier friend to help them out financially, which could create resentment or tension
Even if they start small, these sources of friction between friends may grow until they lead to a serious rift in the relationship.
Benefits of making friends across a wealth gap
Friendships with people in different life circumstances may also help you grow as a person. They may challenge your assumptions about the world and create opportunities for experiences you might not otherwise have.
Social benefits of friendships with wealth gaps
Nurturing friendships across an economic divide might also have long-term benefits for society. A study published in Nature reported that cross-class friendships tend to increase economic mobility and reduce income disparity in the subsequent generation. If you and your friends can sustain your connection as you raise families, your children may not have as large a financial barrier to cross.
How to stay friends with someone despite financial disparities
Keeping a friendship strong despite differences in wealth can involve deliberate effort. However, by anticipating and steering around some common pitfalls in mixed-income relationships, you may be able to sustain a mutually respectful and rewarding bond. Below are a few strategies that may help you with this challenge.
Be honest about your budget
Some friends with wealthier people describe getting frustrated about frequent invitations to activities they can’t afford. Turning these invitations down for financial reasons can lead to embarrassment (delete – ‘make you feel embarrassed’) or create a sense that you don’t fit in. Some people may feel pressured to go along with the group, causing them to spend too much or take on debt to pay for pricey meals, concerts, or vacations.
In these cases, be clear that these activities aren’t within your budget and you’d prefer a cheaper activity. Doing so may be uncomfortable — surveys repeatedly show that money is among the topics Americans are most reluctant to discuss with friends. Still, financial transparency can prevent your friends from assuming you don’t want to hang out with them while reminding them to keep cost in mind when planning future hangouts.
Being honest may take some self-discipline. You might find reining in your spending more difficult when surrounded by others who aren’t trying to conserve their money. However, success in staying frugal can help you avoid believing your friends are bad for your wallet.
Try affordable activities
Finding less costly ways to bring your friend group together may ensure the less wealthy members of a friend group aren’t excluded. You can plan a cocktail party at your house instead of going out to an expensive bar or organize a camping weekend at a nearby state park instead of a trip overseas.
Groups don’t have to plan everything they do around the friends who earn less. You can still enjoy more costly activities, but be understanding when not everyone can participate. Additionally, if you’re the lower earner in the friendship, you may put effort into brainstorming alternate leisure activities. Expecting your friends to do all the planning can lead to hard feelings, even when no money issues are involved.
Don’t take your friends for granted
People who find financial success sometimes discover that their friends now expect them to pay for every shared activity. This behavior can quickly lead to resentment, making the higher-earning friend believe the group members are taking advantage of them.
When you form a friendship with someone with more significant financial resources, take care not to give the impression of mooching or taking them for granted. Accepting a gift may not be harmful if they periodically want to treat you to a night out or pay for your ticket to an expensive destination. However, showing appropriate gratitude and appreciation can be crucial when this happens.
Give each other the benefit of the doubt
Despite your best efforts, friends may become offended during conversations. Someone might make a comment that seems to imply that you didn’t deserve your good fortune or act in a way that seems like they’re rubbing their wealth in your face. In these moments, try to assume their action was an honest mistake rather than a deliberate attempt to give offense. Maintaining a friendship can sometimes mean letting certain situations pass.
Depending on the nature of the offense, you might talk with your friend later and let them know how you felt (delete – ‘they made you feel’) so that they can avoid this behavior in the future. Honest communication can be constructive if you carefully avoid an accusatory or judgmental tone. If they seem understanding and offer a sincere apology, accept it and move forward.
Talk about your feelings with a therapist
Even if you’re determined to remain friends with someone at a different socioeconomic level than you, feelings like frustration and envy may still arise. Instead of dwelling on these negative emotions and letting them grow, consider talking them over with a counselor or therapist. Techniques like cognitive-behavioral therapy (CBT) or mindfulness training may help you let go of counterproductive feelings, such as resentment of a wealthy friend’s success or impatience with a lower-income friend’s frugality.
You can often find qualified mental health care providers by asking your doctor for a referral or searching online databases such as:
- The American Psychological Association Psychologist Locator
- The Association for Behavioral and Cognitive Therapies Find-a-Therapist
- The Anxiety and Depression Association of America Find Your Therapist Directory
- The Interpersonal Therapy Institute IPT Certified Therapists Directory
Alternative mental health support options
One way to get assistance for your friendship challenges is to talk with a licensed counselor online through a platform like BetterHelp. This approach often enables easier scheduling, in part because there’s no need to travel to a second location to participate in sessions. In addition, online therapy is often more cost-effective for those with lower incomes.
Though sometimes considered less traditional, Internet-based mental healthcare appears to be as effective as in-person therapy for many people. For example, a 2020 research review compared standard and online cognitive-behavioral therapy and concluded that they produced “equivalent effects,” suggesting that counseling over the web is still valuable for tackling behavioral and emotional difficulties.
Takeaway
Why does money break friendship?
Although it doesn’t always, money can disrupt friendships for several reasons. The dynamic often depends on how much money is shared, lent, or sometimes discussed within the relationship. Here are a few common examples that may explain why financial differences can become a source of tension in a friendship:
- Power imbalance: Depending on the circumstances, when one friend has more money than the other, it can create an imbalance in the relationship. The friend with more money may unintentionally dominate choices about activities the group participates in for fun, or the friend who’s “broke” and struggling to make ends meet may feel anxious about keeping up or guilt about not contributing equally.
- Unspoken expectations: Money can come with expectations, especially when lending is involved. When friends don’t discuss money expectations and boundaries, it can lead to misunderstandings and resentment. The concept of the “friendlord” arrangement is one example. It can create several potential issues if one friend’s parents bought them a home and the other friend rents a room there.
- Different attitudes towards spending: Friends sometimes have conflicting attitudes towards spending, saving, and splurging, which can lead to strife. For example, one friend might feel pressured at some point to spend beyond their means to keep up, or another might feel judged for how they spend their money.
- Intergenerational spending patterns: Friends of different generations may have differing spending patterns. For example, more millennials spent money this past year on items like housing, healthcare, and personal insurance than their Gen Z counterparts who are younger and still more reliant on their parents. This type of spending disparity can lead to conflict on both sides.
- Feelings of exploitation: If one friend repeatedly covers expenses or lends money, they may feel exploited and disrespected. On the flip side, the friend who receives help may feel guilty or resentful for being seen as dependent.
- Status or success sensitivity: Money is often considered a symbol of success or status. When close friends differ in their financial achievements, it may give rise to feelings of jealousy, competition, or inadequacy.
Does money affect friendship?
It's sad when money comes between friends. However, a recent survey conducted by financial services company Bread Financial suggests that money is a source of contention for a considerable number of friendships. Out of 1,670 respondents, 21% said they had lost a friendship over money issues, and 26% said they felt "financially incompatible with their friends.”
How does the wealth gap affect people?
Research reveals that in the first quarter of 2024, ten percent of the population owned almost two-thirds percent of the United States' total wealth. These statistics suggest that the wage gap in the U.S. affects many people on many levels. Here are some examples of how financial disparity impacts people:
Physical health and well-being
Individuals with limited financial reach may need help to afford healthcare. Therefore, they might be more likely to forgo preventative or emergency care. Studies also show that poverty can be a notable barrier to physical activity and health-promoting opportunities. People with less wealth may face limited access to nutritious food, safe housing, and mental health services, leading to higher rates of physical and mental health issues. Wealthier people generally experience better health outcomes, longer lifespans, and reduced stress, while those with fewer resources may live in high-stress environments that can lead to chronic illness.
Educational and social opportunities
Wealth gaps can create significant disparities in educational access and quality. Kids from wealthier families tend to attend higher-quality schools, participate in enriching extracurricular activities, and have access to resources like tutors or test prep. This inequality is cyclical, as children with better educational opportunities are sometimes better-paid adults, furthering the wealth gap. A large wealth gap can also make it more difficult for someone born into a lower-income family to move up the socioeconomic ladder. This disparity in upward mobility limits people’s ability to improve their financial situations, creating a cycle where poverty is passed from generation to generation.
Mental health
Financial disparity can lead to feelings of inadequacy, frustration, and low self-esteem, especially as people with less money compare themselves to others with more. In highly unequal societies, individuals with fewer resources may feel stigmatized, which can affect their mental health and self-worth. As in the case of physical health care, individuals with limited income might also be reluctant to speak with a mental health care professional due to concerns about cost.
Social cohesion
Significant wealth gaps can create divisions within communities, leading to a lack of trust and unity among people of different socioeconomic statuses. Wealthier individuals may become isolated within certain neighborhoods or social circles, while those struggling with fewer resources may feel excluded, decreasing overall community cohesion and mutual support. High levels of income inequality are often associated with increased crime and social unrest.
Political power
Wealthier individuals often have more influence over political decisions due to their ability to fund campaigns, lobby, and access policymakers. This can skew political systems in favor of the wealthy, leading to policies that may not serve the broader population, exacerbating inequality even further.
Why do I struggle so much with friendships?
Friendship struggles are shared experiences with many different contributing factors. For example, personal traits like self-consciousness or social anxiety can make it harder to honestly feel relaxed or open with others. Sometimes, people set unrealistic standards for themselves or others in friendships, which can lead to disappointment or frustration. If you feel like you're not "enough" or worry that people won't like you, believing you're worthy of friendship can be challenging and make it harder to connect with others.
External circumstances might also make it challenging to find and maintain friendships. If you've been let down or hurt in past friendships, you might find it harder to open up or trust others, potentially creating distance in new friendships. In other cases, it’s a matter of being in different circumstances than the people around you. When lifestyles, values, or priorities don’t align, it can feel difficult to form lasting bonds.
How does money spoil friendship?
Money can significantly spoil friendships. For example, if you lend money to a good friend and they don't pay it back, it can strain the relationship. Sometimes, friends clash over values and priorities associated with money, which may lead to uncomfortable emotions like guilt or shame.
If an individual flaunts their wealth to their friends, who must closely watch their spending, it can cause feelings of inadequacy or resentment. You might also feel judged by your friends' choices or career progression or uncomfortable in their homes. You might feel bad if you can't afford to do the same activities as your friends, or perhaps resentful if you're conceding your plans to accommodate others with less money to spend.
Is money a reason to break up with someone?
It depends on the details, but money can be the reason people end relationships in certain situations.
Is the wealth gap ruining friendships?
According to reports from several highly regarded worldwide publications in the past few years, the wealth gap does seem to be ruining some friendships. For example, a 2023 piece in The Guardian explored how friendships are impacted by the status Western society puts on wealth and how it can influence judgments on personal worth. The New York Times, CNBC, and Vox have also published stories about the negative impacts of financial disparity on friendships.
Does money spoil relationships?
Money can spoil relationships, but with communication, understanding, and empathy, it is possible to subvert financial issues as a cause of strife.
Why does money affect relationships?
Money and finances may affect relationships on a psychological level because of the meaning we often assign to wealth and how it shapes how we think about ourselves and others. Money's emotional and psychological influence can profoundly affect different types of relationships.
What is the root cause of the wealth gap?
Causes of the wealth gap aren’t always immediately obvious—they might take time to notice—and it could be too late for some individuals by then. They often vary from country to country, but for the most part, they arise from a combination of structural, societal, historical, and individual factors. Here are a few potential causes to be aware of:
- Historical injustices, such as slavery, colonialism, redlining, and systemic racism, have prevented certain groups from accumulating wealth over generations. For instance, discriminatory housing policies in the 20th century in the U.S. barred Black families from buying homes in specific neighborhoods, limiting their ability to build generational wealth.
- Some families with generational wealth have a significant head start in providing their descendants with financial security, education, and opportunities. This perpetuates the wealth gap, as those without inherited wealth may struggle to accumulate assets independently.
- Quality of education is often tied to income and neighborhood, meaning wealthier areas typically have better-funded schools, smaller class sizes, and more resources. This educational disparity might make it harder for lower-income individuals to access high-paying jobs or advanced skills, potentially relegating them to lower-income brackets.
- Middle or lower-income families might rely on debt for education, housing, or emergencies, leading to high-interest payments that reduce disposable income and hinder wealth accumulation. Wealthier families, on the other side, can invest in assets rather than accumulating debt, allowing their money to grow.
- Wage stagnation and job polarization can widen the wealth gap, as can tax systems that favor wealthier individuals. The rich often have greater access to investments, property, and financial markets that allow them to grow their wealth over time at an interest rate that is out of reach for lower-income individuals, who may not have the resources to invest.
- Wealthy individuals and corporations often have more influence over political decisions, leading to policies that favor the rich. This can include tax cuts, business subsidies, or lax regulations, which often exacerbate the wealth gap by disproportionately benefiting those at the top.
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