Unless you live in a cave, chances are the occasional awkward or embarrassing money situation will arise. Whether you’re the one who’s embarrassed about the financial topic or you’re being confronted with someone else who is, it’s always best to have some idea of how you’re going to handle a sticky money situation when it comes up.
To that end, we’ve spoken with some experts to get their take on what some of the most common awkward situations are that revolve around money, as well as how they would recommend handling them. Here’s what they suggested.
Awkward Situation No. 1: You’ve borrowed money from a family member or friend, and now you can’t pay it back on time.
Why it’s awkward: Unless your family member or friend is Mark Zuckerberg, dishing out cash to someone else probably required some financial finagling on their part — not to mention the fact that they might have always been a little dubious whether they’d ever get paid back.
How to handle it: In a perfect world, you’d be able to go back in time and see if there might be some other way to get the cash you needed rather than going down the sticky road of borrowing it (a personal loan might’ve been a great fit, which just happen to have some great rates right now — check it out). Alas, this is not a perfect world, and now it’s time to face the music.
“The best way to address this issue is to acknowledge the problem and then provide a solution at the same time,” says Priyanka Prakash, finance specialist with Fit Small Business. “First acknowledge that you are late to pay back the loan — doing that is important because your lateness may be impacting the lender financially. The next step is to provide a clear solution for paying back the loan. Get a payment plan down in writing and share it with your friend or family member.” You may have to make some of your own sacrifices for a while until you pay the person back, says Prakash, but it’s worth it to get things back on track and settle what you owe.
Awkward Situation No. 2: You have bad credit, and things are getting serious with your significant other. It’s time to have the money talk.
Why it’s awkward: Sharing the intimate details of your financial life with others is never fun, especially when it’s someone you’re potentially planning to spend the rest of your life with. In every relationship, though, there comes a time when it’s only fair to share the dirty details.
How to handle it: You can’t hide behind finances, especially your credit, when you’re in a serious relationship, says Jeanne Kelly, CEO and founder of The Kelly Group Coaching, Inc, so it’s best to just go ahead with the talk. “What if the next step is to purchase a home? You wouldn’t want the conversation to happen at that point,” says Kelly. “Discuss your credit with your partner and make a plan to focus on making it a priority. Start paying bills on time and work on paying down old debt and building healthier credit. You can even pull your credit report and you can both review it together so you are both on the same page.”
As awkward as the conversation may be for you, it’s best to avoid any surprises when it comes to relationships and finances — it’s what you would want, too.
Need some additional help with your credit? Check out this piece for the best options for rebuilding your credit score, and this for ideas on how to pay down debt. On the other hand, if you believe your significant other may be committing financial infidelity, read this.
Awkward Situation No. 3: You have one friend in particular who loves to brag about their financial know-how — and it drives you crazy.
Why it’s awkward: While we’re all for talking openly about money with your friends — if that’s something you’re interested in — finance talk can turn uncomfortable when it’s unwelcome by other parties.
How to handle it: Since the boaster is most likely just looking for attention with his or her financial prowess, the best option would be to not engage. The problem with this tactic, however, is when your friend tries to actively pull you into the conversation.
“My first reaction is to be armed with knowledge,” says Timothy Baker, CFP®, founder and CEO of Wealth Shape.
For example, if a friend if goading you with her latest stock purchase and how great it is, “if you can respond with something like, ‘Ya, I hear what you’re saying, but I’m more of an investor and less of a gambler. As a big picture person, I prefer to look at my portfolio as a whole, rather than any single holding,’” you’ll probably get her to back off rather quickly. If that’s even more than you’d like to share, though, it never hurts to simply state the facts. Something like, “You know, I’m not really into talking about my portfolio over dinner — would you mind if we change the subject?” should do the trick.
Awkward Situation No. 4: Your credit card is declined … in front of friends.
Why it’s awkward: Whether your friends are aware of any financial stickiness you may be dealing with or not, having your financial life called into question so openly (and socially) is never fun.
How to handle it: If you’re positive your finances are in order and you just know this was some kind of mistake, there’s no harm in either asking the restaurant to run it again or simply trying another card. If you’re not surprised by this outcome, though, Prakash suggests handling the situation as smoothly as possible by simply apologizing and promising to foot the bill the next time. “You can even make up for the inconvenience that you caused the other person by buying dessert next time, too,” she added. “Also, it never hurts to have some cash for unexpected situations like these.”
Awkward Situation No. 5: You and your partner have conflicting ideas about what constitutes “good” spending and saving habits.
Why it’s awkward: Sometimes the hardest thing about a relationship is reconciling differences in financial attitudes. If you’ve spent the majority of your adult life taking care of your own money and handling your own saving and spending, it can be difficult to let someone else’s opinions in.
How to handle it: Recognizing the fact that a lot of how people deal with money comes from their background will go a long way in helping both of you understand the situation. For example, let’s say you have $1,000 in the bank at the end of the month after all the bills are paid, and you think you’re flush while your partner thinks you’re in dire straights. “You don’t disagree on the fact that there is $1,000 in the bank, but that amount means different things to each of you, depending on what you want in life, what your money experiences have been and how you’ve been raised,” says April Masini, a relationship and etiquette expert and author.
For example, if you come from a background where money doesn’t flow easily, it stands to reason you might want a bigger cushion of savings, while someone who lives in the moment and doesn’t think too much about the future may only looking at what’s in the bank for today. “Neither one of these outlooks is wrong, but they can be incompatible,” says Masini. “The best way to overcome this challenge is to agree to mutually respect your differences, and to come up with compromises that take care of both of you. For instance, maybe you put half the money left at the end of each month into retirement savings, and half into fun or agreed on projects, like a vacation.”