Joanne*, a 40-year-old executive, celebrated her milestone birthday last year on an island in the Caribbean. But not all of her closest girlfriends were invited. “I chose to vet my invite list based on who I thought could afford it,” she says. “I have some really close friends I [would have] loved to be there, but I didn’t want to put them in a situation where [they had to take on] a financial burden or [where] they had to say no and then we’d have to have an awkward conversation.” That decision caused some discord, and Joanne now wishes she had given all her friends the option to attend—or skip—the trip.

Of course, the idea that money disparities—real or perceived—can put stress on even the most tight-knit friendships isn’t new. A 1995 Friends episode called “The One With Five Steaks and an Eggplant,” for example, explores the awkwardness that can ensue when the friends with money expect the entire group to evenly split the cost of pricey concert tickets and dinners out without asking if everyone can afford it. But these days, with social media making it seem like bachelorette parties in Cabo and big birthdays in Paris are the norm in many friend groups, it can be harder than ever to keep wealth gaps from impacting your friendships and personal finances.

Fifty percent of young Canadians have gone into debt thanks to keeping up with friends.

In fact, a 2019 Credit Karma study found that 50 percent of young Canadians have gone into debt thanks to keeping up with friends, spending money they didn’t have on things like vacations and weekend trips. Last year, a survey of Americans by the same personal-finance company found that 47 percent of gen-Zers and 36 percent of millennials have considered ending friendships over money.

Sandy*, a 30-year-old teacher, started noticing the wealth gap among her friends once they were in their mid-to late 20s. “It wasn’t really apparent or, I guess, an issue until my friends and I got older,” she says. “We started to notice an imbalance and a bit more sensitivity around the topic of money.”

Even though Sandy is in good financial shape now, she spent years working on contract as a supply teacher and is very aware that not all of her friends can afford the same things. “I don’t want [my] friends to break the bank,” she says, noting the high cost of birthday parties as many in the group turn 30. When making plans, she will say, “I know not everyone will be able to join, but this is the price, and if it’s within your budget, can you let me know?”

Jessica Moorhouse, a financial counsellor and the host of the More Money podcast, sees this dynamic play out in a number of ways with her clients. “Close friendships will change, and people will kind of link up depending on how close they are in terms of their lifestyles, incomes and wealth,” she says.

If you’re earning less than your friends, Moorhouse advises being upfront about your financial situation—they might not even know that you’re struggling to keep up. “If you keep on making accommodations for them because you don’t want to make it awkward by saying you can’t afford something, you’re going to do yourself a big disservice in the future,” says Moorhouse. By spending beyond your means, “you’re not going to be able to save as much money or invest as much money for your future or pay down your debt.”

If you’re the high-income friend, take the time to have those conversations and understand your friends’ financial situations. “Sometimes you can pick that up naturally, when they talk about work or whatever, and you can kind of figure out what their income level is,” says Moorhouse. “And when you’re suggesting a restaurant, keep that in mind—don’t pick a really expensive steak house if you know it might be a stretch for them.”

The same goes for group getaways and celebrations, which are now more common as many continue to embrace “revenge travel”—travelling as much as possible to make up for time and opportunities lost during the pandemic. According to a study by wedding-planning website The Knot, about a third of us are spending more than $1,300 per bachelorette party.

Lisa*, a 29-year-old publicist, has seen first-hand how pricey trips can cause friction within a friend group. Leading up to a bachelorette party she went to in Las Vegas last year, there were sidebar conversations between some of the dozen attendees about the discomfort around money and how it’s really challenging to accommodate everyone in a big group set- ting and important to make sure everyone feels comfortable in terms of how much money they’re putting into the experience. “It’s really hard when you’re trying to be money conscious and going on a trip like that because everything is preplanned so you feel obligated, in a way, to spend the money,” she says.

If you and your friends are going on a trip together, Moorhouse suggests having a conversation about the budget and expectations in advance, especially if you’re the person leading the plans. “It may seem awkward at first, but sometimes people are waiting for someone else to bring up money,” she says. “You can lead that conversation and be like: ‘So, I’m just putting some numbers together, and this is what it’s looking like right now. Does this make sense? Is this good? Is it not good?’” Ideally, everyone who is attending should have a say and feel comfortable with the final costs and plans.

While she’s been able to turn down invites and stay on budget, Sandy has seen friends overspend on birthday parties in Tulum, weddings in Dubai and friend trips to Japan simply because they didn’t want to miss out. She even intervened when one friend was considering a couple of pricey trips, saying to her: “You have to understand that these friends have been working since they were a certain age—they have the funds. Even though we want to have that lifestyle, that’s not us. We can’t do that yet.”

Her friend booked them anyway, going on two long-haul international trips with less than a month between them. “It was cool, but I don’t know if it was the best choice,” says Sandy, who is more careful with her spending. “I’m aware of not living beyond my means; if I can’t [afford] something, then I won’t participate.”