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How Much Money Are We Supposed to Spend on Friends?

How Much Money Are We Supposed to Spend on Friends?
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As we grow up, there’ll come a time when we ask ourselves: “am I spending too much on my friends? Is there a limit as to how much should go into a birthday gift?”

Thankfully, famous Chinese businessman Li Ka Shing has a formula:

Your Salary  x  20% = How much you should spend on friends

So, if you make $500 a week, then you should be spending $100 of that on friends. That’s a lot!

Truth is, Li Ka Shing (being a businessman) is treating that $100 like an investment. He goes on to say that, “you should spend on people who are more knowledgeable that you, richer than you, or who helped you in your career.”

Okay, but what about the rest of us who don’t necessarily want anything out of our friends?

For me, my rule of thumb is: Usually $25, and up to $75 for close friends. 

Is this rule of thumb reliable?

Of course, this really depends on a few things, like:

  • What’s customary in your circle of friends? Your age and social status may affect how much you should give.
  • What’s the occasion? If it’s just a night out on town, don’t go beyond $25. If your friends typically order alcohol and it drives up the bill, be selective on which nights you hang out on. If we’re talking about gifts, you might give less on birthdays than you would for a wedding gift.
  • How close are you to that person? I’ve kinda touched on this already, but obviously I’m willing to spend more on closer friends than I am with people I’ve just met.
  • Is your friend conscious about gift prices? Different strokes for different folks, they say. You’d probably be willing to splash out a bit more on a friend who’s more materialistic. For someone less into the glitz, you might make be able to make a card or some sort of craft work for them.

Unfortunately, this is not a question with a clear cut answer. You’ve heard my rules of thumb, but you have to come up with your own.

I know, I know – it’s not easy. On one hand you want to show your friends that you’re sincere. On the other hand, all these little “events” and dinners can add up.

One thing you might want to do is try to change the culture in your friend group. Of course this requires a difficult conversation, but you might surprise yourself – your friends might be all thinking the same thing, just that they’re not willing to talk about it!

If you’re not willing to make you feelings known, I suggest you do this:

Be unique!

If you’re unique, your friends won’t care how much you’re spending. Because your effort shines through it all.

Throw an intimate get toegether – Instead of going out on the town, start a little earlier and have a picnic at the park! Or play the “generous host” and have everyone over at yours for a potluck! You can save heaps this way.

Save money, spend time – If you’re giving gifts, why not try some crafts? There are loads of free instructions online. Or, if you wanna go all the way, you can take an online course to learn some craft skills that you can use again and again. For example, check out this sick origami course for just $10.

Set aside some dough for when you really need to spend – Having a “spend on friends” fund can take the sting out of blowing a wad of cash on a single dinner, or gift. Put away a % of your salary each month for friends (kind of like that formula at the start of the article.)

Because you’ve set aside money for that purpose, it’ll be easier for you to apportion a bit of the fund to pay for your friend’s do.

Conclusion

Don’t get me wrong. I am not a birthday hater. I view these occasions as an opportunity to spend time with friends. A birthday celebration is not an ego-centric, attention craving event. It is a chance for all of us to get together and honor our friendship. All I want is to be reasonable about it.

I would never put a price tag on a friendship. Nevertheless, I do want to let my friends know this:

“Money can buy you company, not friends.”

Comments (30)

  • Add to birthday parties bridal showers, weddings, and baby showers and I couldn’t agree more! Though my biggest pet peeve are invites from people I don’t even consider friends anymore. Sorry, if I haven’t talked to you in years, I don’t want to go to your baby shower or travel 2000 miles for your wedding (former work colleague), much less send you a gift in the mail because I don’t want to be there.

    The worst part is when people know you CAN afford it, but choose not to spend your money that way. Frustrating.

    Thanks for the killer quote at the end. I’ll have to remember thant one.

  • I see this as kind of silly – if it’s not a milestone birthday, then seriously? My family doesn’t even spend a fraction of that amount on me on my birthday, and nor do I on them. friends are invaluable, but being friends should be enough.

  • How much money am I supposed to spend on my child’s 3rd birthday part? I mean it’s not even him. It’s that we have gone to every birthday party under the sun and didn’t realize he was so popular. Now it’s time to reciprocate. That doesn’t concern me as much as the fact that I have a daughter who is building up her little friends now and she is only 1.

  • $2,000 painting? That’s a little ridiculous. Is this person rich? I don’t know anyone with that kind of expectation. Hopefully you can stay friends, but it might be difficult with that kind of expenditure.

  • How much money you can spend on someone, or what material thing they can buy you, shouldn’t ever be considered in a friendship. I had friendships like this in the past, and they are no longer friends. I think it’s all in how you think a friend should be. Personally I would like someone there in good times and bad, not just when they want me to buy them an expensive gift.

  • The real lesson here: only make friends with frugal, personal finance bloggers 😉

  • Yikes! It definitely sounds like they just put a price tag on their friendship. I’d probably get some new friends who don’t need you to pay $300 just to prove to them that you are a good friend lol. And also, who asks for a $2000 painting as a birthday present? That’s crazy!

  • Uh $2000 painting?? I would not be friends with that person.

    To celebrate our birthdays we usually go to an affordable restaurant, if that. Sometimes we skip that, someone volunteers to bring the cake, and its BYOB. Not that we are cheap, but just broke. Time is better than money.

  • I’d simply say that while I wish them a happy birthday I don’t have that in my budget. If they’d like to contribute to your birthday fund to the same tune of $300 early I’d be happy to go to your party and give you your money back.

  • You definitely shouldn’t have to take out a loan to keep your friends! I feel like, if your friends aren’t understanding of different financial situations, they’re not worthy of my friendship. My friendship is worth a lot more than $300, so I would hope your friends feel the same way about you. If not, they don’t deserve you!

  • I have no problem telling my friends where to stick it!

  • I think we’ve all had/have friends like that. I know I’ve been in the situation a couple of times and on more than one of those occasions, I’ve told my friend, bluntly, that I didn’t have the money to pay the entrance fee, or eat at the spendy restaurant and would meet them somewhere later. They are always a bit offended, but they quickly get over it, or they drift off and the friendship disappears. And if that happens, it wasn’t that great of one to begin with.

  • Now you understand why I’m mostly a hermit. I have 5 friends whom I’m close to and we are like-minded. We don’t spend if we don’t have it….in fact we don’t celebrate birthdays every year…often once in 3 years! Our budgets vary and so do our life styles so there’s no perfect fit.
    I’m known as a non-party-goer. I usually turn down invitations unless it’s family. In particular, I hate wedding invitations where it’s stated: “no boxed gifts” and “no children”. Can’t bear the commercialism that’s entered the social sphere. The easiest things is to just say “no”.

  • Sounds like to me your friends should at least cover the entrance fee, dinner or something. Otherwise, this is an expensive night out that you weren’t prepared for.

  • For really close friends I don’t mind shelling out a bit more on something for them but for acquaintances or people I hardly ever see I don’t think this is reasonable. True friends should never expect anything from you.If you do give them something it should be a surprise and really appreciated.

    Our friends all have different budgets so we never impose anything on anyone. We are just happy to have the company.

  • I have a birthday dinner every year at the same restaurant. My friends are expected to pay for their own dinners, but not for mine, nor are they expected to bring me any kind of gift.
    The things is, my birthday is less than a week before Christmas. My brithday dinner isn’t so much about my birthday as it is being the time we all get together during the holiday season before heading out in various directions.
    Our group also does one big birthday dinner in April because we have 6+ birthdays that month. For that, we have a set amount each person should bring, dine family style, and again, just hang out. No one is expected to bring anything for the birthday people.
    And in no case is anyone shunned for not being able to come- whether it’s for money or time reasons. Those who can come, do. Those who can’t, don’t. And we’ll see them some other time.

    I can NOT imagine the birthday person dictating to me what they should receive as a gift, especially if they are expecting something as expensive as your friends. That just boggles my mind. I give only if I want to, and only what I can afford to. In my mind, it’s not a “gift” if you’re telling me what I have to buy you. (And yes, I have been known to go off registry for weddings and baby showers of people I’m particularly close to.)

  • I’m with you! I have a particular friend who is constantly inviting me out to do things with a hefty price tag. I want to hang out with her, but I’d be content to just have brunch and go for a hike. The most frustrating part is that she says she wants to save money too and doesn’t understand why her savings aren’t growing!

  • I feel for you Aloysa, it’s getting ridiculous that people now expect this. Not sure how society drifted into this state of affairs…

    It’s a similar situation with weddings. I’ve just go back from a friend’s wedding in Venice! I don’t know why people assume you can afford to go abroad and take time off work!

  • Ugh, that’s horrible. I’ve had friends like that–they expect this huge lavish event every single year. We’ve drifted apart because I started to decline more and more “fun” things that just involved a lot of money. Especailly as I didn’t really find them fun to begin with.

  • It sounds like your friends value money more than their relationships. My friends like that have eventually just fell by the wayside.. maybe you should re-evaluate those friendships? If my friends ever ask me to do things that cost too much I usually say I don’t want to spend that much and suggest other things. Although the people you refer to sound pretty set in going to these places.

  • I prefer thinking about quality over quantity.

    Thank you for your good article.

  • Yep.. you need some new friends.

  • I think we should very careful while spending money on friends. If they have no change of money, suffering from any critical issues or medical treatment etc.

  • Wow! Your friends have outrageous expectations! I don’t find this to be true in my circle…I totally agree with your closing quote, though.

  • I have a really close friend who I am always buying for, and it’s not like I have the money either, I just love her so much that I like seeing her happy every now and then. I have always been a big giver, always getting something for her, but I usually try to stick to birthday’s or christmas when it comes to getting her anything, and if it’s not one of those occasions, I try not to spend on her, but when I do, I want her to know how much she means to me, so I will shell out a good amount of money and get her something nice, and the great thing is, I never expect anything in return on my birthday or christmas. I don’t like getting gifts, I just like giving them, it makes me feel good. Is there any harm in that?

  • I just wanted to thank you for writing this article. I stumbled upon it while googling the topic out of frustration.

    Let me preface my post with this:
    1. I have a lot of financial stress, and do not feel good about spending money on anything other than the necessities.
    2. My own birthday celebrations are always on the cheap so as not to exclude or cause hardship to anyone wishing to participate.

    Last year, my friend wanted to travel an hour away to go out for her birthday. To be completely honest, I had very little interest in going just based on the cost of travel alone ($30+), and was becoming increasingly frustrated as her plans developed. I have a lot of financial stress, and do not feel good about spending money on anything other than the necessities. That being said, I have no problem spending a little bit of money on a friend’s birthday to show that I care.

    The first stop on this friend’s birthday adventure was a VERY lavish restaurant, that neither of us could actually afford based on our earnings. I drank only water and had the cheapest thing on the menu. I spent most of the meal feeling like I didn’t belong because
    1. Her other friends were upper class.
    2. Her friends were all already friends with each other, and had no interest in talking to me.

    Overall, I spent a lot of time having a mental conversation with myself and observing the decor of the restaurant.

    When the bill came, she went to use the bathroom – probably to avoid the awkward settling of our bill. One her friends suggested that everybody split the bill equally, but I pretended not to hear and instructed the server to swipe my credit card for the amount that I owed, and tipped according to that amount. This irritated her clueless friends.

    Why should I chip in for your apps, entrees, booze, and dessert??
    1. I couldn’t even afford to get full at this restaurant – I had and appetizer for dinner.
    2. I DON’T EVEN KNOW YOU.

    To put this story into perspective, the automatic GRATUITY ALONE was a little over $800. Yes, you read that correctly – eight hundred dollars! And no, we are not celebrities… the exact opposite, actually.

    The night didn’t end there, though, as dinner was followed by coffee, which was then followed by clubbing (and admission fees).

    It is now nearing my friends birthday, again… and all I feel is anxiety, as my financial situation is actually worse now than it was last year. She expressed wanting to have a similar birthday celebration as last year, but I told her that I simply could not afford it. She seemed really disappointed, and this depressed me, putting me into the “screw it- I give up” mind frame.

    Following our discussion, it seems she is adjusting her plans to be remarkably more reasonable than last year’s, but STILL – This night will cost me probably $100.

    Generally speaking, I don’t understand where people get off expecting so much. An occasion doesn’t have to be ridiculously extravagant to be remembered. In the case of my friend, she is very dear to me. I am frustrated because I love her very much, but I feel like she doesn’t understand where I am coming from… and the position she is putting me in.

    Further, I suspect that the root of her desire to “go all out” on her birthday has something to do with the life she leads the rest of the 364 days in the year. I can completely understand needing a brake from being the poor girl, but it is really unfair to burden your friends with this princess-like notion that reality stops and there are no limits to the experiences that should be yours on your birthday.

    • Thank you so much for sharing your story.Wow! I am appalled that your friend hasn’t even considered talking to you about how you feel and what you think about her birthday celebration. I can relate! Thank you for stopping by and reading my post.

  • Thank you so much for posting this! I have been so anxious lately about the same topic. My friends are lavish spenders too. They like to spend on shopping, traveling, dining, celebrating occassions and giving gifts and being a minimalist and non-consumerist that I am, it makes me think that maybe I need to change my set of friends. They gave me a nice white gold necklace with diamonds on my birthday and my other friend an all-expense paid trip to visit us since we are living overseas. I love them to the bones and I appreciate their big heart and generosity but it’s just that I can’t keep up anymore. I am the one who earns the least and have the most financial burdens and my lifestyle is so different from theirs. I know I don’t have to spend as much as they do but when I don’t, it makes me feel like I’m so selfish because we have a friend who doensn’t earn a lot too but she doesn’t care that her debts mount up as long as she can give extravagant gifts. And they are very vocal that they love her for that! It makes me feel “unloved” since I don’t give gifts as expensive as theirs. The top spender also just gave each of us a signature bag which I will not buy myself since I prefer to save and it’s her birthday soon so I am pressured to give a gift that can match the price tag of her gift to me. I once gave them a simple gift but until now I have not seen them use it so it gets me to think that my inexpensive gifts are not appreciated- and neither is my friendship! Those who spend so much are closer to each other than to me. I would love to shower them with big gifts too but I can’t just afford it. I don’t know if I am just being paranoid but I feel they don’t like me anymore. I really want to find new set of friends who are not big spenders and who will just appreciate my friendship even if we don’t spend much.

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