Should You Spend Money to Help a Friend?

friends and money

friends and moneyBack in the day when I was single, I was in the market for a car. The POS I paid $2,300 for shortly after coming back from living in Germany for two years didn’t last long and after only a year I had already put over $1,000 in it to fix all its various problems. As I was talking to some friends at church about it, one of the guys I knew fairly well told me to come by the dealership where he worked and he’d get me a “good deal.”

Friends and my money don’t mix

I had the reasonable belief that I could trust this guy, so when I got to the dealership I told him I already had a car in mind that I found on Craigslist and just wanted to explore all my options. I also told him my max was $7,000. Immediately, he started showing me cars in the $12,000 range. After taking a couple for a quick test drive, I asked him how he was going to get the price down to $7,000. I was naively excited about the idea of getting that nice of a deal.

He responded, saying that he was showing me those newer cars because he could get me a lower monthly payment with those ones. Of course, that’s only because banks will allow for a longer loan term if the car is newer. So the payment’s lower, but that only means you’re paying more principal and interest. He was disappointed when I reaffirmed my $7,000 figure, then started showing me the nastiest cars they had on the lot. A Chevy Aveo that reeked of cigarette smoke (I drove a Geo Metro in high school, so no I don’t want his chain-smoking brother). Then an old Hyundai Sonata with upholstery ripped up and what looked like vomit stains all over the back seat.

Both looked like winners, but I finally told him thanks and that I was going to continue my search elsewhere. “Hold on a sec,” he said. “Just come in and fill out some paperwork and we can look at some others.” Fortunately, I had my dad there with me because I had no clue what I was doing. When we sat down with the credit application and my “friend” ran off to his sales manager in the back room, my dad told me what was going to happen next. Sure enough, this guy came back out with the cheesiest smile on his face and said, “What do we have to do to get you into a car today?”

And then I left.

This guy told me he was going to get me a “deal” because we were friends. I had talked to him enough to know that he was a struggling salesman (no kidding), so I knew he was desperate and was probably counting on me to “help a friend out.” But doing so would’ve cost me thousands of dollars, making it a little one-sided. Is that the kind of friend you want? One who expects you to shell out to help them out? I ended up getting that car off Craigslist for $6,600, by the way, and it was perfect.

This time I was the scumbag…sort of

Fast forward about four years. I was doing an internship in financial planning. As a newbie, I started out selling life insurance, which is always a great product to chat up your friends about 🙂 Anyway, it was important to me not to make anyone feel like they had to do me any favors. I was genuinely interested in making sure they were covered and told them if they didn’t feel comfortable buying from a friend, that was 100% OK.

So I was miffed when, at the end of my internship as I was calling all my clients to let them know I would be passing them onto other advisers, one of them emailed me: “Hey, can you cancel our policies on your last day? We only bought them to help a friend out.”

I said I was miffed, but I was actually pissed. First of all, we were actually more acquaintances than friends, so I didn’t understand why they would drop $50/month for life insurance to help out a guy they barely knew. Secondly, the main reason I sold them the insurance was because they had a year-old daughter. Side note: If you have any kids at all, you better have life insurance. It made me feel as if I had tricked them into getting it to help me out, even though I was always adamant about giving off the opposite vibe. And I distinctly remember telling him not to do anything unless they felt like they should.

Suddenly it made sense why he kept trying to get me to sign up for some multi-level marketing thing he was doing. You scratch my back, I scratch yours, right? Kthanksbye.

If your friendship has a price, run

So here’s the deal. We’ve all got friends who sell something. But just because they’re your friend does not mean you have to pay more to “help them out.” If your friend sells car insurance for just a couple of bucks more a month than the next guy, sure. Help her out. If your buddy sells cars and is willing to get you what you want at the price you’re looking for, go with him every time and get him that commission.

But if you’re shelling out more money because you get the feeling it’s necessary to maintain your friendship, it’s time to get new friends. The same thing goes for family members too, even though it’s a lot harder because you’ll still see them at Thanksgiving. My dad never bought insurance from me when I was selling it, even though I recommended it. Some would think he should be the first to help out his starving student son who was just starting out in the biz, but I respect his decision not to. He gave me his time. He listed listened to what I had to say, got some valuable information, and then made an educated decision about what was best for them. After all, it’s his money.

Moral of the story: Do what’s best for you and your financial goals. Don’t let relationship “requirements” get in the way of that.

(photo cred)


20 thoughts on “Should You Spend Money to Help a Friend?

  1. This is great advice — especially the “get new friends” part! I would be happy to buy something from a real friend that was selling it, if I needed it, but I would never buy something I didn’t need, and I can’t imagine any of my friends pressuring me to. I’d honestly rather just give them some money if they were really struggling (and I’ve actually done that, when people had huge medical bills or something of that sort.)

    1. Yeah I’ve never had to deal with that kind of stuff with my real friends. I actually did have one good friend chat with me about joining his multilevel marketing business, but when I said I wasn’t interested, he got over it and we went and played basketball. No harm in asking, but the expectation should stop there.

  2. Ugh- car salesmen are the worst! I fell for it when I bought my first car too- spent 25K on a new Mitsubishi Galant. I could not afford that car at all and spent the next several years struggling so that I could afford my monthly payment. Some of the best lessons come from life experience. Never again.

    1. Yikes! That’s no fun at all 🙁 A friend of mine didn’t have a job and just wanted to pay for a car in full with his savings, but somehow the dealership talked him into financing it anyway. Horrible.

  3. I never try to sell to my friends, just because I feel “sleazy” doing it. If they have a need that I can meet, I usually steer them in another direction that will help. The only time I help them is if they start the conversation or ask if what I do will help them in any way.

  4. You need to be a special breed to sell cars. I asked to borrow money once from a family member and they told me “no” at the time I was upset, but looking back at it now it was a good decision on their part. We were not managing our money well at the time and i would have just put us further in debt.

    1. Very true. Even meeting one for the first time, I can’t get over the feeling that the guy’s a sleaze ball.

      Good on your family member for telling you no. Although, I know you’re now in a lot better shape financially, so kudos to you too! 🙂

  5. I found the best way to get out of a situation that is awkward where a friend is trying to get you into something is to say, “that’s interesting, I’ll give it some thought.” Hopefully they won’t come around again, but if they do, then you can make more of an informed decision and at least your friend will know you did take time to think about it (even if you already knew the answer).

  6. I have a friend who I would help AT ANY MOMENT. She’s a great woman and we’ve known each other for more than 25 years. I’d give her the password to my big hosting account (with my sites and my clients’) – oh, wait, I did this years ago, when I didn’t have wi-fi for 2 weeks at the seaside resort we vacationed. She’s that type of a person.

    On the other hand there were people who have taken me for granted, so my list of ‘I’d give any money to you’ is actually VERY VERY small.

    1. Awesome to have a friend like that! I’ve had friends like that before, people who will do just about anything for you. Those are the type of people I’ll go to bat for any day, and I know I won’t have to spend any money just to keep their friendship because I know they’ll never ask me to.

  7. I have fallen for quite a few of these “friends” even smaller things like candle parties or lia sophia parties. It’s never good to be on the other side where you feel your friend is only in contact so you can buy from them.

  8. Excellent post, Ben. I don’t think friends and money mix either. The only time I mix the two is when I’m giving a friend something with the sole intention of blessing them with absolutely nothing expected in return. Otherwise I’ve found it’s best to keep the two separate.

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