Tactical Tips on Managing Finances Among Friends
Managing finances among friends can be tricky, especially when it comes to splitting costs for dinners, drinks, vacations, or recurring bills with partners and roommates. Here are some tactical tips to make sharing expenses easier, ensuring everyone can focus on the fun rather than the finances.
The awkward reality of splitting costs
According to Credit Karma:
32% of people feel awkward splitting the bill with friends
47% are willing to eat the cost of a bill to avoid awkward conversations about money
46% experience extreme anxiety putting large group charges on their credit card
These statistics highlight a common challenge: managing shared expenses can be emotionally taxing and stressful. But it doesn't have to be this way. Here’s how you and your friends and family (and foes!) can make splitting the bill less stressful.
1. Establish clear communication
Before heading out for a group dinner or planning a trip, establish clear communication with your friends. Discuss how expenses will be split, whether it's equally or based on individual consumption. This helps to awkwardness when the bill arrives and ensures everyone is on the same page. How can you actually phrase this?
Before we head out tonight, what are everyone’s thoughts on handling the bill? I’m comfortable with [splitting equally/itemizing the bill] but want to make sure everyone’s on the same page.
2. Create a shared expense fund
For groups that frequently hang out or share recurring bills, consider creating a shared expense fund. Everyone contributes a set amount regularly to one person or in a joint account, which can be used for common expenses. This way, there's always money available for group activities, and no one feels the pinch of covering costs upfront.
3. Set a budget for group activities
Set a budget for group activities to avoid overspending. Whether it's a weekend getaway or a night out, agreeing on a budget helps manage expectations and ensures that everyone is comfortable with the spending plan. Not sure what to say? Here’s an example text to send to the thread:
What are we all thinking in terms of cost? I’m comfortable in the $X – X range but want to make sure everyone’s on the same page.
4. Be mindful of everyone’s financial situation
Not everyone has the same financial capabilities, and that's okay. Be mindful and considerate of your friends' financial situations when planning activities. Opt for affordable options and make sure everyone is comfortable with the planned expenses before booking.
5. Keep track of expenses in real-time
One of the most effective ways to manage shared finances is to track expenses in real-time. Instead of waiting until the end of the night or trip, log expenses as they occur. This helps everyone stay aware of the spending and makes splitting costs more transparent and accurate.
6. Don’t wait too long to settle up
The more time that passes, the less likely you are to feel comfortable asking for the cash you’re owed. On the other side of that coin, if you forget to settle up, it can damage trust in your relationships.
How to avoid financial awkwardness for good
Wondering how to make all of the above easier? Check out Orbit, an app designed to take the anxiety out of paying for group expenses. With Orbit, you can connect with your group via the app, set a split ratio, and pay one time with a single tap — no more chasing friends for reimbursements or dealing with unfair splits. Sign up for the Orbit waitlist today and be the first to experience the future of shared expenses.