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March 18, 2022

How to handle differences of income among friends

What do you do when dealing with a wealthier friend who's quick to reach for his wallet in social situations? Sure, it's a nice problem to have, but everyone wants to feel some sense of control when it comes to money. 

Say, you've just bought Raptors tickets and want to bring him along.

If you tell him the tickets are your treat, he’ll still insist on paying. But if you tell him the tickets were free (likely the only way he won't pony up), you'll miss out on some of the charge that comes from giving an expensive gift.

Here's what to do, suggests Dan Ariely, a professor of behavior economics at Duke University whose latest book, The (Honest) Truth About Dishonesty, explains how creativity makes us better liars, particularly to  ourselves.


Take your income per month (for simplicity, say $10,000) and divide it by the cost of the two tickets (again for simplicity, say $200), Ariely suggests

Now multiply this number by the number of hours you work per month (let’s say 160), and you get the numbers of hours that you need to work to pay for the tickets (3.2 hours in this case).

Now, tell your friend “it took me more than 3 hours of hard labor to get these tickets,” which allows you to create a benchmark without necessarily revealing your precise income.

With this kind of framing, not only will your friend not be able to pay for the tickets, but he'll also appreciate your investment in him and your friendship to a higher degree.

How do you handle issues like income disparity? Where do you draw the line?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...