4 Money-Etiquette Questions Answered

Many of us have been put in awkward situations by friends, family, or colleagues. When the awkwardness revolves around money it can be taken to an entirely new level. This is because everyone views money, and how to use it, differently. What is valued to you may be wasteful to me. This is normal but has the penchant to lead to hard feelings if not handled appropriately.

Author Lisa Gerstner from Kiplinger covers four common situations and sought advice from an etiquette expert for some guidance.

1. At a restaurant, your friends suggest splitting the check evenly, but your meal costs less. If these are people you don’t meet with often, divvying up the check evenly is probably the best way to handle it. The same goes if you regularly eat out with certain friends and the price of your meal is usually about the same as theirs. “You’d hope that in a group of friends, this comes out in the wash,” says manners and lifestyle expert Thomas P. Farley. “You do not want to be the person who’s whipping out the calculator.”

If, however, you often go out with people who tend to order more-expensive meals and drinks than you do, it’s okay to ask your server for a separate check before the meal, says Daniel Post Senning, of the Emily Post Institute. In fact, your fellow diners may appreciate the move: They can order as much as they want without feeling as though they’re imposing on you.

2. You’re asked to pitch in for a group gift at the office, but there’s bad blood between you and the recipient. You’re under no obligation to participate or to explain why you’re turning down the request, Senning says. The organizer shouldn’t pressure you. If requests for money at the office become overwhelming, Farley suggests bringing up the issue with colleagues you trust. Chances are they feel the same way. In that case, you could suggest changing the practice rather than eliminating it—say, having a once-a-year office birthday party rather than buying a gift or going out to lunch for each one.

3. A friend asks you to support his favorite cause, but you’d rather choose your own charities. A polite no is an acceptable response, Senning says. You can tell your friend the reason if you wish, but you don’t have to. (Be diplomatic. If you’re refusing because you dislike the charity, don’t badmouth a cause that is obviously important to him.) Soften your response by complimenting your friend—for example, tell him that you admire his generosity. And keep in mind that if the people who are asking you for money have donated to your causes in the past, there’s a higher expectation that you’ll pitch in for theirs.

4. A family member asks you for a loan, but you’re not comfortable lending to her. In all likelihood, the one asking for the loan is as uncomfortable as you are. “It’s a real ego blow to have to go to friends and family for money,” Farley says. “It’s probably the last resort, and nobody wants to do it.” Be conciliatory as you decline, and don’t make up a reason for your refusal that isn’t true. For example, don’t say that you never lend money when you have done it in the past.

Help out in another way if you can. Farley suggests that you offer to be a job reference, for instance. (But avoid cosigning a loan, especially if you question the borrower’s ability to repay it. You’ll likely be asked to pay up if she defaults, and your credit rating would be on the line.) If you do lend money to someone, you can boost your chances of being repaid by putting the agreement in writing with explicit terms, such as interest required and payment due dates. LendingKarma.com and LoanBack.com set up legally binding loans for you, including payment schedules, recordkeeping and e-mail reminders; each site charges a $30 fee for those services. At Prosper.com, a borrower could take out a Friends and Family Loan from just you or from multiple people. The site arranges automatic bank-account withdrawals free and charges a closing fee as a percentage of the loan.

What money-related situations do you hate to be put in? How did you deal with it?

Post by Jesse Jurgenson, Financial Counselor
The Village Financial Resource Center

2 thoughts on “4 Money-Etiquette Questions Answered

  1. What is the best way to handle trying to get family members to pay back a loan? I borrowed my two brothers each $16,000 nearly four years ago, complete with a signed loan agreement that spelled out semi annual interest payments. I have received about half of the money back but have had to get nasty to get that much back. It has created hard feeling s with one brother, who has told me that I am “just being greedy.” Seriously? I did not receive an interest or principle payment in 2011, only partial in 2010. While they buy new vehicles, go on vacations and party on the weekends, I am working three jobs in order to semi support 2 hard working college aged kids. This was supposed to be a short term loan – now it has become the giant wedge in the family with me being the bad person. Any advice other than never borrow money to family is certainly appreciated.

    • Thank you very much for the comment and question. Unfortunately, your situation is a common one. I generally give people two paths to go down and let them choose depending on their situation and individual goals. Considering you mentioned that you have tried to have adult conversations about the debt in the past, check out the below options.

      1) If you truly need the money back and feel as though the relationship has been damaged to a point of no return already, consider taking this matter to small claims court. In North Dakota, as long as the claim amount is under $10,000 and not more that 6 years has elapsed since the date of the debt or date of the last payment, a claim may be filed. You do not need an attorney for this and the costs are minimal. If you are successful in receiving a judgment against your brothers, you may then force repayment through wage garnishment or a levy on their bank accounts. Go to http://www.ndcourts.gov/court/forms/small/forms.htm for more information.

      This is a very aggressive approach and will most likely cause continued bad feelings within the family. However, there is a greater chance that you will receive your money back. You may then decide how much time and effort you want to put into repairing those relationships.

      2) If you do not want to deal with this situation anymore and feel that the relationship with your brothers is the most important thing, treat the money you gave them as a gift and never mention it again. Continually bringing it up appears to only make things worse. This amounts to “all bark and no bite”. You also need to be careful not to make side comments about it or let your body language show anger. What I mean is to really “let it go”.

      Overall, it looks as though they are not willing to repay you on their own. This has backed you into a corner. Keep in mind the effect the lost funds are having on your own quality of life along with dependent children. The decision you need to make is what is more important for you and your family; the money or the relationship? It is not an easy decision and I wish you the best of luck.

      Hope this helps.

      -Jesse Jurgenson

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