Greg Clarke

My new handbag was reasonably priced and in a lovely shade of tan that went with everything I own. I felt just great about making the purchase—until a day later, when I ran into a close pal. She took one look at it, raised an eyebrow, and said, “That’s a nice purse. Is it evidence that your remodeling project came in under budget?” The answer: hardly. My heart sank. I felt mortified, as though I had been caught doing something wrong. And then deeply uncomfortable. I didn’t want to have to justify my spending or financial decision-making to my friend.

Most of us are ill at ease talking about money even with close relatives—much less with our pals. That’s true of any time, but more so when the economy is weak and people are fearful. Plus, none of us want our loved ones to think of us negatively because they perceive we have too much money or too little; are too free with our cash or too frugal. So naturally we struggle to reply to money-related comments. Next time you’re at a loss for words, try these strategies.

Your friend asks the price of an item you’ve purchased. Be honest. (It’s not as if she can’t Google the item and find the price herself.) If it’s costly, explain that you’re willing to shell out for quality products. If it’s cheap, go ahead and boast about the amazing deal that you uncovered.

Your friend pries for specific information about your finances. Don’t reveal anything you don’t want to. Tell her that as much as you trust her, you have a policy of keeping such information private so as not to cause friction in your relationships.

Your friend overshares about her debts or money troubles. Commiserate while making it clear that you don’t want to hear the gory details. Say, “I’m sorry you’re going through hard times. If you need advice, I’d be happy to help you find a professional money adviser.”

You and your friend disagree over how much to spend when you go out. Maybe she wants a fancy three-course dinner while you’d prefer to grab a (cheap) slice of pizza. Or you’d like to luxuriate at a plush spa, but she’s not willing to shell out for more than the cost of a movie ticket. Instead of getting frustrated that your spending priorities aren’t aligned, have a frank chat about your budgets before you make plans. If you’re counting pennies, tell your pal, “I’d love to see you, but I’m being financially cautious, so I don’t want to spend more than $25 on our evening out.” In the mood to splurge? Then say, “I am treating myself and would love nothing more than to have you join me. But if you don’t wish to—for any reason—I’d be happy for us to spend our time together engaged in another activity we can both enjoy.”

—Michelle Slatalla