pixdeluxe/iStockPhoto / Getty Images
Last week, I found myself splitting the tab with a group of friends I’d never travelled with before.
We were a mixed bunch, from steak lovers and vegetarians to non-drinkers and wine enthusiasts. Our supermarket shopping carts had no rhyme or reason.
In the end, we avoided conflict by setting expectations in advance and, for this particular trip, we agreed to split the bill evenly, assuming that some people saved in one category where others spent more and vice-versa. We also decided to settle up all at once on the last day of our trip, avoiding any awkward conversations down the line.
That said, there’s no shortage of horror stories of friendship-ending travel. A recent PayPal survey found U.S. adults were owed an average of $926 for group expenses such as dining and travel. A third of the respondents admitted they struggled to collect, often feeling judged.
Conveniently, my social media algorithm served me a carousel declaring, “This is your sign to open a shared bank account with your friends.” The aspirational pitch: if you’re travelling with friends, pool money by autodepositing a small amount every week into a shared account in the lead-up to the trip.
The concept went viral after Australian event planner Kim Brindell shared how she and five friends each chipped in about $18 a week for their group travel. By the time their girls’ trip rolled around, they had more than $3,596 set aside to cover expenses such as hotels and groceries.
My skepticism was confirmed over a phone call with Francine Dick, a Toronto-based certified financial planner.
“It’s an idea that is fraught with danger,” she said. “If you set up a joint bank account, what joint means is that everyone usually has equal access to it – it can create a lot of problems.”
With a joint bank account, she said, there’s paperwork to set it up and nothing preventing someone from going in and taking out money.
In reality, the groundwork for effective bill-splitting should start long before boarding a plane. One trick is sharing an anonymous Google form or poll where everyone selects their comfort level for various costs – from hotels to excursions to dining options – choosing from a few different price ranges for each category.
“[It’s] a great idea to better understand people’s budgets and expectations,” said Jessica Moorhouse, a financial counsellor and author of Everything but Money. It’s also a chance for people to opt out of expenses they aren’t comfortable with.
Another tip: Select one leader to designate spending categories and to give gentle reminders when someone’s money is overdue. It can take away some of the awkwardness when it’s someone’s job to keep people accountable.
If you know you’re a budget-conscious traveller, set your boundaries right off the bat. Use the “step-down spending” method to express what you can commit to on group trips and where you can offer an alternative that better meets your budget (e.g., a spa day in the city with the bride instead of joining the bachelorette party abroad).
“Better to speak up than come back from a trip with credit card debt and some unresolved resentment with your friend group,” said Ms. Moorhouse.
Has splitting travel expenses on a group trip cost you a friendship? Have you mastered a bill-splitting strategy? Drop me a line at mpostelnyak@globeandmail.com.
Subscribe to the On Money newsletter
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for On Money here.
Mariya’s personal finance reading list
Chart of the day
Callout
Have you shelled out big bucks for an eagerly anticipated concert, comedy show or other live event in Canada only to have it cancelled at the last moment? I want to hear about it. Drop me a line.
ICYMI
What to do when your vision of retired life doesn’t match your spouse’s? Nasdaq changes rules to avoid pump-and-dump schemes. Will the TSX follow? This Winter, Canadian snowbirds may take flights back to the U.S.