How to avoid fights with friends about money

Lending or borrowing money with friends often seems easier than going to the bank – but we’ve all been in those tricky situations when one of you can’t afford to pay the other back. Here are our top tips for avoiding those awkward money conversations.

group of friends sitting having heated conversation

When is it okay to borrow from a friend?

Borrowing money from anyone should always be thought through, but there are some occasions when borrowing from friends can be fine:

  • When you’re out somewhere without a cash card/wallet/nearby cash machine. You have the money, just not on you, and you fully intended to pay them back.
  • You only asked for 40p for a bag of crisps… I mean c’mon!
  • You asked them to lend you rent/ food money until your next pay cheque arrives, on the clear understanding you will be able to pay them back then.
  • They lent you the ticket price for a big event coming up, say a festival or one-off club night. You’ve agreed a payback scheme over a month or three.

And when is it not OK? 

  • When you know they have no cash, just a generous nature.
  • When you have no intention of paying it back (but they expect you to).
  • When you are only mates with them for their cash.
  • When the amount is too much and you don’t feel comfortable taking it.
  • When you’re borrowing because you have nowhere else to turn.

I’m panicking. I promised them their money back and now I don’t have it

Even the best laid plans can go to pot– you forget one of your bills needs paying, you have to get a train home for a family emergency, or your car breaks down and now you’re left with higher outgoings than expected and no spare cash to repay your mate.

Crucially, you have to stop avoiding them and talk – sorry! Once you’ve had the chat you may find that your friend isn’t actually desperate for the money and perhaps will allow you to set up a more realistic payment plan. If that isn’t the case and they really need the money back then there’s support out there to help you from feeling overwhelmed. Call the Money for Life helpline on 0808 801 0666 for non-judgemental support about your specific situation.

My mate owes me and they’re not returning my messages. What should I do? 

A friend who doesn’t pay back what they owe is not necessarily a bad friend – perhaps just a skint one.

Again, you need to talk to them. This may sound awkward but you’re entitled to ask for your money back. Their response is likely to be ‘Oh! I totally forgot!’.

If they’re really not able to pay you back, work together on a longer-term solution that suits both of you. Perhaps even show them this article for some top tips.

How can I avoid problems in the future? 

Regardless of whether they offer or you ask, both sides need to agree some ground rules for the transaction. Depending on the amount and urgency of pay back, you can be more flexible here but generally speaking the lender should say:

  • How much they will lend;
  • When they expect it to be paid back;
  • How they expect payment – lump sum or instalments?

While the borrower (that’s you!) should be honest about:

  • Any difficulties they may have in paying it back;
  • When they plan on paying it back;
  • How much they can afford to pay back each week/month.

I don’t want to get into debt in the first place

Communication is one of the best ways to avoid high debts that feel out of control and scary. Once you see an unpaid bill, don’t hide from it. Call the supplier – they have to help you – or call the debt helpline and sort out problems before they start. See ‘Should I get into debt?’ for more tips.

More information

  • Go to Money Advice Service for free and impartial money advice.
  • The National Debt Helpline offers free, confidential and independent advice on debt issues. 0808 808 4000
  • The Mix is a free, confidential multichannel service giving young people in the UK the support, information and practical tools they need to be healthier, happier and more resilient.