A new study shows mixing friendships with money can quickly damage relationships, but financial experts say there are ways to protect both your money and your friendships.
The research reveals that many people have seen friendships end over money disputes, and a significant number would not even lend money to their best friend if asked.
"It's not exactly breaking news that friendship and money are a pretty volatile mix, but our survey found that there's an awful lot of people who are seeing friendships end over money and an awful lot of people who would not even loan their best friend money if they ask," said Matt Schultz, LendingTree financial analyst.
- 41% of Americans admit they’ve had tension with a friend over money, while 36% have had a friendship end because of it. Nearly half of parents with kids under 18 have seen a friendship end for that reason.
- Of the 77% of Americans who’ve lent money to a friend, 19% say it affected their friendship negatively the last time they did and 32% didn’t get their money back. In fact, 47% of Americans say they wouldn’t loan their best friend $500 if they asked.
Setting boundaries before money changes hands
The key to avoiding relationship damage lies in having uncomfortable conversations before any financial transactions occur.
"A lot of the tension and a lot of the damage caused by the intersection of friendship and money could really be diffused by just having some honest conversations before all of this happens," Schultz said. "It's a whole lot better to have those conversations and set boundaries and expectations up front rather than tackling it later when fires are burning."
Put agreements in writing
Financial experts recommend documenting any money lending or borrowing arrangements between friends, even if it feels awkward.
"Even sending an email with a couple of bullet points just saying this is what we've laid out, just helps to ensure that everybody is on the same plane, makes sure the expectations are definitely clear," Schultz said. "It may be a little awkward to mention... you're just kind of making sure that everybody's on the same page."
When you need to say no
Sometimes declining a friend's request for money is the right choice, and true friends will understand.
"We've all been told by our parents that if somebody doesn't like you or doesn't understand you or doesn't get what you're saying, maybe they're not your real friends," Schultz said. "There can certainly be that side of things when it comes to lending money."
The bottom line: Open and honest communication is the core of any good relationship, especially when money is involved.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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