6 Honest Questions & Answers Between 2 Friends With Very Different Incomes
They say it’s not polite to talk about money in mixed company, but who “they” are has always been lost on me. Still, talking about money has always been hard for me because I grew up with the understanding that money was taboo.
As a child, I didn’t want for anything, but I did figure out relatively early that my family had less money than my friends’ families. I learned not to ask for things I didn’t need. That learned silence followed me into adulthood, and began straining my friendships after I got home from college, when I couldn’t go out to bars or fancy dinners because I didn’t have the money. Simply saying so felt like admitting defeat. It led to a lot of jealousy and resentment that I’m not proud of. But since I’ve been in my current job, I’ve tried to open up the money conversation with my friends so that we can all feel more comfortable being honest about our financial situations — even if it’s just enough to say “I can’t afford that. Can we consider something else?”
So many of our social graces are tied up in money, that it’s almost inevitable that income disparities will become a sticking point between friends. Whether it’s the weekly meet-up for drinks, or shelling out for a bridesmaid dress, our social contracts necessitate everyday transactions that pile up, and some of us just can’t afford them. Last month, I sat down with my best friend, Alice (whose name I’ve changed for privacy purposes), to have a totally honest conversation about our financial lives. I’m a freelance writer by night, marketing professional by day who earns a base salary of $6,500 TTD ($975 USD) per month. She’s an optometrist who earns $22,000 TTD ($3,300 USD) per month. We’re both 27-year-old college educated women. Here is our conversation:
1. What do your finances look like right now?
ALICE: My monthly expenses are mostly mortgage and utilities. I pay for water, electricity and internet. I don’t have cable anymore, so I pay for Netflix, plus a landline I never use. I also have my cell phone bill and my house and car insurance. Then I have the more day-to-day stuff like groceries, and odd house things that come up that I need to maintain, like home repairs.
I also have a TISP, which is basically a retirement account and money comes out of my salary for that every month, plus I put aside a chunk for savings. I used to have a lot in savings, but I just bought a house and a car and paid them off in cash. Going into university, I had a scholarship that paid 50% of my expenses. Instead of using that money for school, it went into a savings account, and my dad paid my way. When I came home, I had a huge chunk of money that all went to me, so my savings were flush. I used that money to put a down payment on a house and buy a car out of pocket, and I don’t always realize how lucky I am to have been able to do that.
CATE: My expenses are relatively low, because I don’t pay utilities. My biggest monthly expense is hands-down my rent, which is $1,500 TTD. I also budget for about $1,000 in groceries, and I have to pay for gas and my cell bill. I try to put aside around $600 monthly for savings, but I’ve been doubling it to $1,200 because I really want to build up a nice cushion. I’m driving my grandmother’s car, so I didn’t buy it, but it’s an older car and little things are always going wrong. That tends to be how my savings get depleted. I set a savings goal of $10,000 TTD for the end of the year that I’m working towards, and my freelance writing helps, since I get paid in USD and that can go straight into savings. I’m looking for a high-yield savings account to put it into so that it grows a little faster. I also have a life insurance policy worth about $15,000; I took over the policy last year, so I pay about $100 on that each month.
2. What was your relationship to money like growing up, and how does it affect you now?
ALICE: I grew up with my parents saying no to unnecessary spending and saving a lot. I didn’t grow up with any brand name things, because my parents were always trying to keep costs down. My main vice is clothing and accessories. I grew up on hand-me-downs, so now that I have a bigger salary I want to treat myself to things I didn’t have when I had to rely on my parents, who had the money but wouldn’t spend it. Now, I can afford to buy my own stuff and be more stylish, and I take pleasure in that. I do try to save but I probably spend a lot more than they would approve of. I’m glad I didn’t have all that stuff when I was younger because now I think I appreciate it more. I can afford to buy a nice phone now, but I don’t feel the need to upgrade every time a new one comes out.
When I was growing up, I thought we were poor because my parents never spent any money, but they were saving up so that my brother and I could go to school and have more opportunities. It worries me sometimes…I like to think I’m self-sufficient, but they’re the ones who’ve helped me get to this point.
CATE: I definitely didn’t get everything I wanted as a kid, but I always had what I needed. I don’t do a lot of shopping now because I didn’t grow up having money to spend, so I never really got into the habit of “shopping” for pleasure. I don’t feel compelled to shop in that regard. But when I do need something, especially clothing, it takes me longer to decide if it’s something that’s worth spending my money on. I think of all the other things I could buy with that money.
3. How do you plan or prepare for big purchases?
ALICE: When I went to Malaysia a couple years back it didn’t cost nearly as much as people think. Not counting the flight to England, the two weeks in Malaysia cost about $5,000 TTD, and that covered food, accommodation, and all the tours we did. I didn’t plan too far in advance to be honest. When my friend came to stay with me in February of that year, we decided to go that same May. She’s a good planner so that helped a lot. But at the time I didn’t have a mortgage or a car payment to worry about. I try not to spend as much anymore. I don’t really have a budget, but I check my balance before bigger purchases to decided if I can really afford something. Last Christmas, my spending was admittedly a little bad, but I also had to pay for flights to visit my family in Canada.
CATE: My budget is stricter, since I have less cash to work with, and I have to make sure it lasts. I use a money-tracking app so I always know how much cash is in all my accounts at any given time, plus all the different apps from my banks. I’m planning a spa day for my birthday in June but the total cost of everything I’d like to do comes up to about $700 TTD. It’s a big chunk of change for me to drop in one transaction, but I’m squirreling away about $125 a month so that when the time comes I won’t feel the sting of the expense as badly.
On the other hand, I made $1,500 USD from my writing fellowship last year. I had originally planned to put it straight into savings but instead I used it to finally have my website built. It’s something I’d needed to do for about three years but just couldn’t afford. I didn’t want to risk contracting someone and not being able to pay, so when I got this lump sum, I decided to look at it as an investment in myself. I’m glad I did it, but it also means this cash that was supposed to be my cushion is gone now.
4. What kind of financial help do you get from your parents?
ALICE: My parents don’t give me money now, but they help a lot in other ways. I always say I don’t get a lot of help from my parents but I definitely do even if it’s more indirect. I bought a house, but I bought it from my dad, so I got it for half the actual value. The car I bought with money from something else that he didn’t make me pay back. For really big things, he would pay, and I’d reimburse him, but he never presses me for the money. The only furniture I had to buy was a sofa set and random kitchen things. I didn’t have to buy any appliances. I have been very fortunate, and my parents have helped me a lot. They paid for my education for me to get this good job in the first place.
CATE: My mom remortgaged our home to pay for my education, and now I don’t have student loans. I don’t have a ton of cash now, but there are a lot of obligations that I don’t have because of her. When I moved to Tobago she helped me furnish my apartment. I didn’t need any of the big stuff, but she helped me get smaller appliances and furnishings, and that stuff adds up. She probably spent $3-4,000 TTD settling me in because she also fronted me the first month’s rent and groceries and bought me work clothes that fit. I did pay her back for those since I figured it was the least I could do. I don’t have to ask for a lot of help, but it’s mostly because she set me up so well. On my current salary, I wouldn’t be nearly as comfortable as I am now if she hadn’t helped me at the outset. When I left home, my one specific money goal was not to have to ask my mom for for money. I do occasionally have to ask my mom for help paying for things, though. They aren’t usually big costs, but she paid for my IUD back in September, because I don’t have health insurance. It cost about $1,400 TTD. It wasn’t exorbitant, and it’s something I could have paid off given enough time.
5. How do you deal with money related FOMO?
ALICE: I don’t really get FOMO anymore. It’s Trinidad, so there’s always another event next year. You never really have to worry about missing out. When I think of the things I miss out on, it’s usually because I’m doing things that matter more to me, not because I can’t afford it, and those things are worth more to me. When I was in England, I was wanted to go to a particular event so badly but by the time I got home, ticket prices had skyrocketed and they were hard to get. I just felt like it wasn’t worth the hassle, so I never ended up going.
CATE: There are definitely things I wish I could participate in, but I sometimes wonder if I could afford it, would I think it was a good use of my money? The FOMO was a lot worse when I was freelancing full-time, though. It was stressful because I didn’t have a steady paycheck, and I was worrying about money and I just felt like I was falling behind all my friends. I still feel like that now, but I can better reassure myself that I’m doing okay for my career path. I also realize that, realistically, I’m not in a particularly flush profession. I’m never going to make as much as my friends who are doctors and lawyers and engineers unless I have some big break. It’s just not going to happen, and it helps me a lot to put my life in context that way. Now, freelancing helps to supplement my income, but I try to keep those earnings separate from what I consider my actual income so that I don’t depend on it.
6. What are your strategies for dealing with money in social situations?
ALICE: I try to be conscious of the fact that not all of my friends can afford to spend as freely as I can. I make a lot, so I can afford to always split the check at dinner, but not everyone can, so I do think it’s unfair to do that. I know that people are embarrassed to ask for money because no one wants to be the friend bumming off everyone else, but when I was in school and didn’t have any money, people helped me out. That was a big deal to me, so now that my friends are in that situation, I feel like I can afford to bail them out. When you’re stressed about money you’re not fun to be around because you’re so worried and anxious. It’s not me saying I have so much more than you, it’s that you’re my friend and I can help you. It’s not pity.
CATE: Right. I’ve always felt bad about being such a bitch at your birthday dinner a couple years back. I had had such a bad day and the menu was nearly entirely out of my price range. I was so stressed out and I was really shitty to everyone. Part of it was also that I was just so embarrassed. When the cheque came, for some reason we were about $200 short and I panicked because I didn’t have any more to contribute than for my own meal. Now, I take the lead in organizing our get togethers every other month. Part of it is because I’m the only one no longer in Trinidad, but the other part is that I’m so limited in what I can do, I feel like picking up the slack in that way is my way of contributing a little more.
Catherine Young is a freelance writer living in Tobago. She believes cake is better than pie, leggings are pants, and Magic Mike XXL is a slept-on classic. If she ever writes her memoirs, they will be called “Sometimes I Sleep On The Floor.” Read more of her writing on her website, or say hello on Twitter.
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