Frugality, Financial Independence, and Social Situations

Maggie writes in:

How do you handle social situations with family and friends who read Money360 and know about your financial state? Does it make things awkward? Do they expect you to pay?

This started off as a response to a question for yesterday’s mailbag, but as I kept thinking about the question and adding to it, I realized that I wasn’t simply writing about me. I was actually writing about every frugal person out there, every person who is actively spending less than they earn and using that difference to build a bright financial future for themselves. The only difference is that I expose my own financial progress and spending preferences right out here in the open on Money360, but that honestly isn’t that big of a difference.

The reality is that we live in a country where 76% of us are living paycheck to paycheck. Most people are spending every dime that they bring in and not saving for the future and it is actually relatively unusual that someone saves a significant amount for their own future.

The tricky part is that the fact that someone is following a different financial path than the norm can sometimes seep into social situations of all kinds and create problems, whether real or imagined. I have actually seen this in my own life and I’ve definitely received reader questions about this over the years.

So, the rest of this article highlights some common social situations that people who are frugal or financially independent or on their way to being financially independent may find themselves in and how to handle it.

The most important thing to note is that most of the time, the fact that you’re on a different financial path won’t matter at all in social situations. The majority of the time, the other people won’t know about it, and at other times they won’t care.

The focus here is on those remaining situations, where your finances may actually have an impact on a social situation.

Splitting a Check

Most of the time, when I go out to eat or do something with friends, the expectation is that we will all split the check fairly and evenly. I’ll pay for my food, you’ll pay for your food, and we’ll move on from there.

You would think that this would be a completely understood social norm… but it’s not. I have gone out to eat with very wealthy friends (before our current steps toward financial independence) and found the check situation to be a little awkward. I’ve also recently gone out to eat with a friend with little money (currently a college student) who is a Simple Dollar reader and it was again slightly awkward.

The reason for this is simple: Sometimes, people will bring a mild assumption to the table that the person in the best financial shape should pick up the check. The reality is that if you’re frugal and spending less than you earn, there’s a pretty good chance this person is you, especially if you also have a decent income.

This is not an assumption that everyone shares, but it is an assumption that’s out there and is a bit prevalent.

Because of this, I adopt three simple rules for eating out with others and picking up the check.

First, I will always vocally say that we are splitting the check or should be receiving separate checks unless trumped by one of the following two reasons. This quickly alleviates any uncomfortable conversations that might come about from splitting the check. If the other person is disappointed in this, then that’s really not my problem. If it does come up in conversation, simply handle it by saying, “Look, I view this meal/activity as something we’re doing as equals. I don’t want it to be any other way.”

Second, I will pick up the check for someone who is doing me a favor by doing something together, providing advice, or helping with a project. These situations are pretty distinct from just doing something with a friend. If I’m getting a lot more value from the other person right now than that person is getting from me, then I am going to pick up that check. Again, I usually tell this to the server or cashier as soon as it is reasonably possible. If the other person objects lightly, I just tell them this is my way of saying thanks for their help, but I don’t overrule a strong objection as some people really feel uncomfortable with others paying for them.

Third, I allow others to pick up the check if they insist on it. If someone simply insists on paying for my meal or my drink or my round of golf or my movie, I’m going to allow them to do so. It is not worth any kind of social disagreement to avoid it. Usually, if someone insists on paying for you, that’s because they feel good for having done so, and that’s not something I’m ever going to interfere with.

Eventually, if a friend becomes a close friend, it can become okay to talk about these things more openly. I have a small handful of friends with which I have directly discussed these things. We’ve usually quickly come to the agreement to just split all checks unless you’re doing something like buying someone lunch because they helped you out with something.

What if the others think you’re ripping them off because of all of the money you have? If they genuinely feel this way, then they don’t really understand you or your values very well and their personal greed is showing through. In both cases, that’s a person I would be less inclined to be friends with.

split the check at restaurants

When you go out to eat with friends or colleagues, agree up front to split the bill — so it doesn’t get awkward later.

Giving Gifts

Sarah and I exchange holiday gifts with many different people, friends and relatives alike. It’s something that we both cherish because of the joy of giving a well-considered gift as well as the joy of opening one.

Of course, this can be a difficult thing when there is a large gap in the financial state of the people exchanging gifts. One gift giver might be in a very good financial state, while the other one is just getting by. Plus, there might also be an underlying assumption that the person who is in better financial shape might spend more on a gift in an exchange.

The solution to this is clear communication beforehand. If you’re thinking of giving someone a gift, talk to that person (or a parent) and set some simple boundaries for the gift. A price limit is a very good boundary to set, and it’s also worth noting if you’re making a gift. Just have this conversation in advance so that you’re not spending far more than would be expected by the other person.

We usually find that homemade gifts work very well in this regard. They work appropriately at a wide variety of valuations because homemade items often have different values and they can be bundled, too. If you make a variety of homemade items, as Sarah and I often do, you can bundle them in different ways to match what you think is a good expected value for the exchange. (I prefer to give consumable homemade items.)

Still, clear communication is at the key of making gift giving work when there may be particular expectations. Part of the reason for clear communication is to avoid putting someone else in a really awkward situation. For example, we recently included a new couple in a long-running gift exchange that we had been doing for many years. This exchange was largely fine, but it would have gone better with clearer communication on all parts involved.

The key thing to remember with a gift exchange is that the purpose is for everyone to feel happy at the end of it. If that’s not the case, then gift giving is rather purposeless. It should be all about the joy, and one way to ensure that is by simply having a brief conversation before the gifts are made or purchased.

Talking About Careers

At this point in my financial journey, when people ask me what I do for a living, I usually just say I’m a freelance writer.

However, what will I do when we actually reach our goal of full financial independence? At that point, I plan on dabbling in a number of things – charitable work, political volunteering, writing a novel, and so on. I’ll probably be doing a big mix of things all at the same time.

When it comes to small talk about “what I do for a living” at that point, I’ll likely just tell them about whatever I’m most passionate about at the moment. If I’m doing volunteer work and that’s my focus right now, I’ll describe the volunteer work without mentioning the pay. If I’m focused on a novel, I’ll say that I’m a nonfiction writer working on my first novel.

I’m a person that can’t sit still and thus “financial independence” is going to mean a variety of short “careers.” I think that many people who have the internal drive to pull off financial independence are going to be much the same way, and thus it makes sense to describe your job as being related to whatever “short career” you’ve chosen at the moment.

Talking About Finances

Every once in a while, I find myself in a conversation about money. People who know me and know that I write so much about money online – and particularly those who read Money360 – already know quite a bit about my financial state, so they take that as a given.

But what about conversations where the other people don’t know your financial state? In those situations, I recommend staying as vague as possible. You can easily carry on a conversation by focusing on financial facts that are independent of your own financial state and simply avoiding any revelations involving your own finances.

For example, it doesn’t matter how much you have saved to be able to comment on how prices are going up or how tax rates should go up or down. It doesn’t matter how much you have saved to be able to discuss the difficulty of paying back student loans or shopping for a car. It doesn’t matter what your financial state is to offer thoughts on how to invest money.

If you’re ever in conversation with people you don’t know extremely well and people are talking about very specific things involving their personal finances, just avoid that part of the conversation. Don’t participate. Don’t share. There’s no good reason to do so, as it doesn’t really cement any financial bonds. Some people might be fishing to see whether or not you’re wealthy, but that’s frankly none of their business and it will often be used against you if they find that you have saved money.

This is part of why I’m not extremely specific about the dollars and cents of our financial state here on Money360. I don’t mind talking about the general state of our finances – we’re free from debt, we’re saving money for financial independence, we basically live off of one salary – and the tactics we use to improve that state, but the exact specifics are really only relevant to Sarah and myself.


There are a lot of good charities out there, many more than I can ever possibly support. Charities are doing good things in my community, my country, and all across the world. Whenever I hear about the good work that a charity does, I’m tempted to donate, which is something that can run in opposition to my goal of becoming financially independent. I’ve also had people come to me for donations simply because they’re aware of our financial state and thus believe that I’m going to be an easy “mark” for donations.

Because of that, I have set up a few guidelines in my life about giving to charities and carrying on conversations about charities.

First, my wife and I give a certain percentage of our income each year across all charities. This is something we decide together, at home, without any input from any charities. We talk about the things we care about most in our community, our country, and the world and we contribute money accordingly.

Because of that, we never agree to charitable donations in conversation. Ever. It’s simply not something that we do. We want to have the opportunity to research charities on our own and make our own decisions independently. We don’t mind being made aware of the overall mission of a charity, but that won’t convert to an immediate donation and we’re clear about that up front.

The exception to that is door-to-door sales and donation drives from neighborhood children, which we give to without hesitation. That’s because our own children will likely do the same in reciprocation and it’s an opportunity to help all children involved learn how to present themselves, describe a product, and build skills that will only help them in life.


If there’s one area where the issue of having a lot of money in the bank can cause some problems and real apprehension, it’s dating. It ties into many of the things described above, and yet goes beyond them.

For starters, on early dates, all you really need to share about yourself is your career, which you can describe as mentioned above. If you’ve already achieved financial independence, describe your career as what you’re passionate about at the moment. If you’re not there yet, then this is simple – just mention your current job or career. That’s really all that needs to be said at this point.

Early on in a dating relationship, there is no reason to reveal the nuances of your financial state. There’s no need to go into any kind of detail about how you pay the bills each month or how much you have in your savings account or how much you have in your investments. Not only is it irrelevant, it’s also potentially unsafe to do so until you know the person pretty well.

Until then, you should behave as though you’re at least on the same financial level as the person you’re dating. Don’t overspend or underspend compared to that person. If you find that the level of spending that you’re doing is making you uncomfortable, whether it’s too little or too much, you’re already noticing something that might be a compatibility issue down the road.

I recommend behaving in much the same way as you would in your normal everyday life when on a date. If you’re not a big spender, don’t be a big spender on a date or else you’re going to give a wrong impression to the person you’re dating. They will think of you as a person who spends freely and will come to expect that from you. If that’s not what you do in the other areas of your life, then you’re bound to run up against some rough spots over time.

In fact, there’s no real reason to discuss financial independence unless it becomes a direct issue in your relationship for some reason. In other words, if you choose to move in with the person you’ve been dating, a conversation about how the bills will be paid is likely relevant here, and a person with sound financial sense will want to know that you’re going to be able to pay the bills, so that will likely be a time to reveal it. If you’re just dating, it really doesn’t matter how you’re able to afford those dates, so there’s no reason to discuss it.

In general, I believe that when you are dating, you should behave as normally as possible and not put on a “false front.” If you’re not naturally a big spender, don’t be a big spender. If you’re interested in certain things, don’t hide them. Be yourself, because if you’re not, you’re setting up some false expectations in the other person.

Final Thoughts

Most of the time, your financial state and financial practices really aren’t anyone else’s business. What you choose to reveal about your financial state is up to you.

If I have one central principle regarding financial situations and social situations, it’s this: When in Rome, do what the Romans do, and if you don’t feel comfortable doing that, then don’t go to Rome any more.

In other words, when you’re in a social situation, you should try to match the choices that the people around you are making. If you’re at a bar and people are buying rounds, buy a round. If you’re going out with a group and they all want to go somewhere expensive, go ahead and go.

If you find that this makes you uncomfortable, then that means that there is some degree of incompatibility between you and the other person or people in the group. That can be resolved with something as simple as a quick conversation where you suggest doing other things next time, but if that’s something that is rejected, it may mean that you should spend some time thinking about whether or not that relationship is one you want to continue to build.

I’ve found that these guidelines have helped me to navigate a lot of social situations that touch upon money, and I hope they’ll do the same for you.

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