Immaterial of what age you are there are times when you get into a sticky financial situation. What are such situations and how do you handle them?

1. A close friend of yours has taken a loan – and is not making any attempt to repay that!

Well this could be a friend, a sibling, a colleague – and the amount is substantial. Best of course is to ask for the money, clearly. If talking is embarrassing, send an email. Or if there is a common friend ask in his/ her presence. There is no point in waiting, thinking, etc. – ASKING is a very important first step.

Of course going back in time, one simple lesson is NEVER to lend an amount that you cannot afford. Blame the tax authorities, your spouse, parents or whomever you want, but have the lending and repaying terms in writing. Once a person puts things in writing and issue post dated cheques, life becomes easier for everybody around.

2. You have a friend who pulls you along for trips you can ill afford:

Thanks to whatever reasons you have a friend who goes on those expensive vacations. Fine as long as you were not tagged along. Sometimes you just do not want to spend Rs. 8000 on a room night for a hotel. You may have other priorities.

You just need to say NO. I find that in group activities if you do not participate, it hurts the relationships – but better safe than sorry. Each person has different priorities in life. Maybe you have a more expensive hobby to support than your friend has. Maybe you prefer travelling by air, and he prefers travelling by train – so he has a greater budget for hotels. Maybe you take 3 vacations a year and he takes one vacation in 3 years. Maybe you go to exotic locations during an off season but he goes during a peak season.

Saying No politely will leave you safe, and keeping mum will leave you sorry. Take your pick.

3. Some friends do not know to split costs

I find this a big issue – especially with younger people going for parties and eat outs. There is a huge amount of different ways in which a bill could be split. Get the boozers to pick up the booze bill separately. Among the kids going out every Friday – obviously the girl who had only the soup does not want to pay for the food.

Again it makes sense to talk about bills, how will it be split, will the petrol / toll costs be split.

Do not let political beliefs or money matters interfere with your friendship!

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  1. Dear Mr Subramaniam,

    I enjoyed listening to your talk today !

    What’s your email id ?

    How can I buy a copy of your book, Wealth for Doctors ?

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    Malpani Infertility Clinic, Jamuna Sagar, SBS Road, Colaba
    Bombay 400 005. India

    Clinic Mobile: 9867441589

    Tel: 91-22-22151065, 22151066, 2218 3270, 65527073

    Helping you to build your family !

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  2. Subraji,
    Point 1 is awesome. Golden words. Wish I were aware of this and I was exploited by relatives. Lesson learnt. This is a wisdom of truth for the generations to come.

  3. Isnt all these called “Life Costs”/”Social Cost”. Do we really want to die alone with a lot of money left behind and no one to bury your corpse!

    I know it is just a foolish argument in a financial blog, but paying the bills for a friend is a polite thing. In my childhood, the student ticket used to cost 25 paisa. It was the person who used to work in farm as a daily laborer who used to pay it for me when I was a student – I never wanted him to do so, but he always insisted! But when it came to an emergency for him, he never asked anyone for help – he could easily tide over it with every ones help. It was kind of “social insurance” for him.

    I am not sure how it works in a city or urban environment where the idea of a society if faded, but for a rural or semi urban location its not always only about money!

  4. Hi Paul,

    I agree with what you have written. At the same time, if you look at the earning and expenditure of such close knit scieties, you will find that it is quite low.
    I do hail from a small place myself and can vouch that you need a much lower level of income to sustain a similar life style in a metro city. Here, you count on your social contacts to bail you out of situations.
    What if – one such contacts bails on you instead of bailing you out?? What next??

    Spend and invest on your social contacts. But not before paying yourself and insuring yourself against any unforeseen circumstances. We would not like to be seen in helpless situations. Would we??

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