Income disparity in friendships can sometimes lead to conflict. A study published last year by a US financial services company, Bread Financial, found 26% of people felt they were “financially incompatible” with their friends, while 21% said they had lost a friendship because of money.
According to Talia Loderick, a money coach, the wealth gap between friends is something more people should be mindful of. “It’s so easy to let friendships fall by the wayside because we’re so awkward and money’s so emotional,” she says.
When dining with friends, it is important to understand everyone’s views on how the costs should be divvied up before you split the bill. This is a topic that divides opinion. When the comparison website Compare the Market carried out a survey of diners, it found 34% thought a bill should be split evenly, including the tip, while 36% said it should be divided according to who had what.
Vivi Friedgut is the founder and chief executive ofBlackbullion, a free-to-use money management app for students. She says that whether it is splitting the cost of household items or eating out, it is vital to have open and honest conversations right at the outset to make sure that “everyone is clear that somebody is fully paying, or that everything is being split across the group equally”.
Tom Allingham, communications director at the money websiteSave the Student, says: “People will often say, ‘I’ll get this, and you get the next thing.’ But what you find over time is that that doesn’t even out. So it might be that one of you gets one dinner and that might be £50, then the other one gets the next dinner. But that might only be £20.” Over time, what can happen is “one of you ends up being far more in the red than the other”, he adds.
According to the most recent Save the Student data, the typical maintenance loan that most students take onfalls £504 shorteach month of covering the average living costs. That could create issues for some more than others within the same friendship group when it comes to splitting costs.
There are a growing number of bill-splitting apps and services that take the hassle out of dividing expenses between lots of people. You may want to look at a few to figure out which one(s) work best for your particular circumstances.
The best-known bill-splitting app is probablySplitwise. Launched in 2011, it enables you to keep track of unpaid bills, rent, holiday, food and travel costs and other shared expenses.
Splitwise works as an IOU app whereby you sign up and create a group. Then you and your friends can start adding expenses. To do this, go to your group on the app, then hit the “add bill” button. You will be asked for various details about the expense, such as the total cost, who paid and how much each person owes. When you hit “save”, the app will update everyone’s balances.
To settle up, UK users normally have to exit the app and go to their banking app or website to initiate payment, or hand over some physical cash, then return to Splitwise to confirm they have paid.
However, a link-upa year ago between the app and the payment services platform Tink enables UK Splitwise users to make direct payments to friends and family from within the Splitwise app.
To use this, you need to link your bank account with Splitwise.
The app is free to use, but also offers a premium service with extra features called Splitwise Pro, which is £3.99 a month or £39.99 a year.
Splid is another free-to-use appavailable for UK users. It doesn’t require you to register for an account. The app lets you choose from more than 150 local currencies and works offline, too, which means it could be especially useful if you are travelling as a group of friends in places where there is limited internet access.
Another free app to help keep track of and settle shared expenses istricount, which is owned by the European financial firm Bunq, and boasts it has “millions of users worldwide”.
These sorts of apps can really come into their own in terms of taking away some of the awkwardness associated with splitting costs fairly and settling up, says Loderick.
She adds: “No one likes the nitpicking at the end of a meal or on holiday. The apps can take that conversation away.”
Allingham says apps such as Splitwise can be particularly effective for splitting small expenses between friends, such as grabbing a coffee.
NatWest used to offer a well-regarded bill-splitting app called Housemate that was designed to “take the stress out of renting” by splitting bills and keeping track of shared expenses. Unfortunately, Housemate is now no more –it was shut down in Februarythis year.
However, several other banks have similar tools.
The app-based bank Monzo has a feature called Split which it says “lets you split, track and chase payments, all in one safe place”. It enables people to keep track of joint expenses such as household bills, and also allows them to split one-off payments such as a dinner. An individual can be added to a Split even if they do not bank with Monzo (they need to be invited by a customer though).
Starling Bank offers an in-app feature called Split the Bill, which it says lets you work out who owes what and send out “IOUs” in just a few taps. Recipients of the IOUs will be taken to a secure webpage to pay you back – or they can do it directly from the app if they also bank with Starling.
The UK digital bank Kroo is another that offers bill splitting. You can set up a group in the app and add your collective spending. Anyone can be part of a group, and you can send a non-Kroo customer a payment link, but if they are not an account holder, they won’t be notified they have joined a group, and they won’t be able to see the group details.
Revolut also lets customers split bills with other users.