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How should money work among friends?

Maybe you resist letting anyone else pick up the check. Or maybe you and pals parse every expense down to the penny.

The first habit leaves you open to exploitation. The second is just annoying if a nice evening out culminates in "Your appetizer cost 50 cents more than mine . . ."

Treats and short-term loans can be generous expressions of friendship. It's fine if you can afford it and if you're pretty sure your pals will reciprocate or pay you back. But suppose you find yourself:

  • Holding the business end of the tab much too often.
  • Lending cash to a needy friend whose "need" turns out to be a night on the town.
  • Agreeing to split the check evenly when it means you pay $50 for your pasta and iced tea.
  • Covering your roomie's share of the utilities, then waiting weeks for repayment.

Fortunately, the solution is close at hand. Right behind you, in fact, running from your neck all the way down to your coccyx. It's called a spine.

Image: Donna Freedman

Donna Freedman

A little higher up is your brain, the organ that lets you decide what you will and won't do -- and that lets you discuss such issues before there's a problem.

Let's talk money

Actually, let's not. It's generally a taboo subject in the United States. The only thing you need to know about money is that you should have lots of it -- or that you should at least look as though you have it.

"The shame of indicating that you might not have enough money is hard to tolerate. So we make choices that we regret later," says psychotherapist Kate Levinson, the author of "Emotional Currency: A Woman's Guide to Building a Healthy Relationship With Money."

A woman she knows served on the board of a nonprofit. After meetings, board members often went out to eat. Too embarrassed to say she was broke, Debra went along -- and because this was a crowd that routinely split the check, these evenings weren't cheap.

Ever been in this situation? You smile, you put in your share and later, at home, you kick yourself for having overspent, again.

Sticking to your budget

Try asking for a separate check upfront. Or say, "I'm not in a position to split the cost evenly, so I'll pay for my share plus tax and tip." That's not a crime, and besides, "you're probably not the only one at the table who feels that way," Levinson says.

You might be twitted about being a tightwad. Do not cave. State matter-of-factly that you need to stick to your budget.

That's not to say that cheapskates aren't out there. Ted Hunter used to go to lunch with co-workers a couple of times a week. They quit inviting one guy because he'd toss in just enough to cover what he ate but nothing for the tax or tip.

Don't do that, and don't let your friends do it to you either.

"Mooching is a character flaw. They are giving you the message that they don't care about your feelings and that their needs are more important than yours," says Hunter, the author of "Money Smart: How to Spend, Save, Eliminate Debt, and Achieve Financial Freedom."

Giving versus receiving

Plenty of us find treats really tricky. We don't want to burden our friends. But it might be a slap in the face to the would-be giver to say something like "I refuse to accept your kindness."

My best pal has hosted me on numerous occasions, sometimes for as long as two months at a clip. She hasn't taken a dime for increased utility costs, and she has encouraged me to raid her cupboards. (I don't, by the way.) When we go out for lunch, there's a "death match" over the bill. She actually tried to pay me for house-sitting when she had to be away for a week.

I understand how she feels, since I want my own guests to feel welcome. But I can't shake the feeling that I'm a great big mooch. So I do household chores when she's not looking and mow the lawn or shovel snow. I also use my extreme-couponing skills to purchase her favorite treats. (Hunter calls these "gotcha" gifts: "What are they gonna do, throw it out?")

Yet I still feel beholden. That's normal, Levinson says: "For some of us, there's discomfort in receiving."

The trick is to find balance. Friends care for each other out of love, so learning to accept gifts graciously is one way to acknowledge and return that love.