Setting Money Boundaries Isn’t Easy, But It’s Worth It
This article appeared in SoFi's On the Money newsletter. Not getting it? Sign up here.
Let’s be honest — money can complicate relationships. You might have a sibling who always needs some extra cash. A roommate who expects you to handle it when they’re short on their share of the rent. A friend who assumes you’re down to get another round or a pricey bottle of wine and then somehow, conveniently, forgets to Venmo you. (More on those “financial frenemies” later.)
If there are people in your life pressuring you to spend money you don’t want to spend (even on yourself,) it can make you feel resentful and stressed, not to mention derail your finances. It can also create some pretty awkward situations — whether there’s someone at fault or not. (Ever have a less budget-conscious friend obliviously suggest splitting the check 50/50 after you ordered a salad and they splurged on lobster and two cocktails?)
In fact, 26% of U.S. adults surveyed last year by Bread Financial said they felt financially incompatible with their friends, and 21% said they’d lost a friendship over money. And a separate survey by Intuit showed 27% of women and 17% of men feel uneasy talking about money in social settings.
Setting money boundaries might feel uncomfortable at first, but it can help you protect your relationships and your bank account. Here are a few tips for gently but firmly establishing limits and expectations around how you spend, discuss and share your money.
How to Set Money Boundaries
Remember, setting personal boundaries is important for healthy relationships, and money boundaries are no different. According to Psychology Today, boundaries give you the physical, emotional, and psychological space you need to feel comfortable, safe, and respected in your interactions with others.
Set Expectations Beforehand
One of the best ways to avoid awkward conversations or hard feelings is to set firm, clear money boundaries at the outset. You might even want to practice what you’re going to say ahead of time.
To that oblivious friend, you might say: “I’d love to join you for dinner, but I’m saving up for my vacation, so I’ll just get something light.” Or, “I’m happy to go, but I have a budget of $20.” Be transparent about your financial comfort level to raise awareness and help prevent misunderstandings.
Broadcast Your Rules
Some boundaries are best communicated broadly so that no one feels singled out. For example, you might make a habit of mentioning your rules when planning group outings or discussing shared expenses. You might say: “I always Venmo right after we split the check,” or “I like to keep my social budget to $100 a week.”
By setting expectations with everyone, before any specific tension or situation arises, you’re making it much less likely your friends or family will feel offended.
Watch Out for Financial Frenemies
There are a number of types of financial frenemies. Maybe they always pick the most expensive activities, conveniently forget their wallet, or guilt you into covering their share. Recognizing these patterns is key to setting boundaries and protecting your money. Addressing the issue directly (but nicely) can often reframe the dynamic — but if it doesn’t, it might be time to reevaluate the friendship.
Offer Other Types of Help
If a friend or relative asks you for financial help you’re not comfortable with, be empathic, tell them you can’t, and then consider whether there are other ways you can show your support.
You might say, “I’m not in a position to contribute money right now, but I can take a look at your resume.” Or, “I’m sorry, I can’t do that, but let’s stay in tonight and brainstorm other options for you.” (If they’re often in a bind, you might even direct them to SoFi’s extensive library of financial tools and guides.)
Don’t Rush to Answer
When someone approaches you about money, it’s okay to take your time before answering. You might regret a quick response, either because you agreed to something you didn’t want to, or because your “no” wasn’t as tactful as you would have liked.
Practicing a few versatile catch phrases now can be really helpful for whenever a situation arises. “Let me think about it and get back to you” is a great one (and not just when it comes to money boundaries.) Or you might try, “I need to check my budget first.” This gives you some time to determine your comfort level and the best way to respond.
Be Comfortable If a Loan Turns Into a Gift
Experts agree that if you do decide to help someone, only offer an amount you can afford to part with. In other words, make sure it wouldn’t put you out if you didn’t get it back. So even if it’s framed as a loan, think of it as a gift. (And if you’re willing, consider actually making it a gift.)
Don’t Expect to Be Completely Comfortable
Setting and maintaining limits isn’t always easy. The conversations may be tough. You may feel guilty. Or you may worry you’ll alienate someone close to you. But don’t get sucked into thinking you’re being selfish by prioritizing your own financial well-being. It will get easier with practice. And ultimately, it should lead to healthier relationships and less stress for everyone.
photo credit: Bernie Pesko
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
OTM2025050701
Read more
