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Financial etiquette: Mind your money manners

From splitting the check at dinner to lending money to friends or family, how do you handle awkward money moments? Jean Chatzky explains how to invest in proper etiquette when it comes to finances.
/ Source: TODAY contributor

Money gets a bad rap for being complicated. Credit reports can read like they're in another language. Balancing a checkbook can feel like calculus. And these days in particular, investing leaves many scratching their heads.

But how about money etiquette? You know, the sticky situations that revolve around check splitting, lending a few bucks to a friend or family member, or being asked — point-blank — how much you paid for that new car. These, to borrow a phrase from Dorothy Gale, may complicate matters most of all.

Why? Because even though it's 2008, many people are still programmed to avoid discussing money at all costs, says Leonard Schwarz, who co-authored the new book "Isn't It Their Turn to Pick Up the Check?" with Jeanne Fleming. Here, some advice for handling those awkward money moments with a little bit of grace.

An unpaid loanThe truth is, many of these casual loans between friends or family members turn into gifts because they're just never repaid. Before you agree to write a check, weigh all of the circumstances involved. How will the money be spent? What do you know about this person's spending habits? What are his alternatives if you say no?

I've always advised people who are dead set on bailing someone out to get the amount of the loan in writing, along with a schedule of repayment. (These days, there are even companies like Virgin Money that can help you do that.) If you're close enough with someone to lend them money, you should feel comfortable hashing out the specifics, right? But if that's really not your style, or you're in a position to forgive the loan if need be, you should probably just come to terms with that as a possible (or even probable) outcome, says Jeanne Fleming.

An uneven checkWe've all seen it happen: Someone who doesn't drink gets stuck splitting the bill — and the cost of two bottles of wine — with the rest of the table. If you're caught in this situation, Schwarz and Fleming say you need to speak up, but how do you go about it without spoiling the mood?

"The best way to ensure that a check is split fairly is simply to propose that it's split fairly," says Schwarz. That may mean reaching for the check as soon as it hits the table and tallying up what everyone owes, or you might try to address the issue beforehand, which is ideal. There are a couple of ways to do it: You can simply ask the waiter to bring separate checks, or you can talk to your friends and suggest that, since you don't drink (or you're just having a salad, or whatever the situation may be), it would be great if they could pick up the tip if you split the bill to even things up a bit. Chances are your friends aren't trying to stiff you — they just see an even split as the easiest way to handle the bill. Politely let them know you don't agree.

A generous gift
What do you do when a friend shows up at your birthday party with an iPod and you know you can't afford to match it when her big day rolls around next month? Nothing, says Fleming, except send a thank-you note. Just because you're given something that is overly generous doesn't mean you have to respond in the same way, especially if you're not financially comfortable doing so.

"Remember that this person gave you a particular gift because they wanted to, not to show you how much money they have. Just give them something that takes a lot of time or thought in return," explains Caroline Tiger, an etiquette expert and author of "How to Behave: A Guide to Modern Manners for the Socially Challenged."

A nosy friend (or neighbor)If your co-worker practically asks to see a receipt every time you show up with a new outfit or pair of shoes, there's no reason you have to buy into it. If a question feels too personal, just opt out. There are a million ways to do it, but merely saying "It cost enough" or "I'd rather not say" is probably the easiest. After a while, she'll stop asking.

A wealthy friendCheckbook balances vary among friends as frequently as hair color or dress size, so there's a good chance you've found yourself invited to a dinner or event that you just can't afford. "If it's really out of your price range, you can always come back with another suggestion," says Tiger. "Suggest meeting for lunch instead, which will be a much more affordable meal." You can also just come out and say that it's not in your budget right now, but you'd love to meet for a drink after. Bottom line: You shouldn't break the bank because you don't want to look cheap or you feel embarrassed.

With reporting by Arielle McGowen.

Jean Chatzky is an editor-at-large at “Money” magazine and serves as AOL’s official Money Coach. She is the personal finance editor for NBC’s “Today” show and is also a columnist for “Life” magazine. She is the author of four books, including “Pay It Down! From Debt to Wealth on $10 a Day” (Portfolio, 2004). To find out more, visit her Web site, .