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Financial etiquette for millennials and Gen Z

Friends enjoying a meal at a restaurant
FluxFactory/Getty Images
Friends enjoying a meal at a restaurant
FluxFactory/Getty Images

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It’s no secret that each generation handles money differently. Baby Boomers are typically tight-lipped when it comes to finances. Millennials and Gen Zers, having been raised in a more open and connected society, are generally more transparent. Since many learn about money from their parents, generational differences can create a lot of confusion about what’s right. From tipping to group vacations, here are best practices.

Dealing with income disparities between friends and family

Maybe your income has skyrocketed relative to your old comrades, or maybe it’s done more of a comparative bellyflop. Either way, things can get awkward quickly when these disparities become apparent — especially if you’ve known each other a long time. But these differences are a natural part of adulthood, and the key to handling them with grace is honesty and good communication.

If activities with your friends are breaking your bank, don’t be afraid to tell them so, and count yourself out of the occasional splurge. You can always pitch free and inexpensive activities to the group. And if you aren’t comfortable sharing that your reason for passing on experiences is financial, a simple “not this time” can suffice. It’s better to deal with a little discomfort upfront than commit to something you can’t afford.

If the tables are turned, and a friend or family member isn’t as well-off as you, focus on supporting and spending time with them in a way they can afford. That’s probably what they want most from you anyway.

Tipping

Contrary to popular belief, baby boomers are actually more generous tippers. According to a 2022 CreditCards.com survey, 87 percent of boomers who go to sit-down restaurants tip their server every time. Only 60 percent of millennials reported doing the same.

Tipping can seem like a social maze of confusion, but the rules of tipping are actually pretty simple. For wait staff at a sit-down restaurant, plan on tipping 15 percent to 20 percent of the bill. If you can afford it, it’s kind to tip even higher, especially now, due to the challenges brought on by the pandemic to those in the service industry.

Splitting checks

Another stressful situation we’re all familiar with: You’re in a group of friends, some more well-off than others, and the bill arrives. What do you do?

In this case, the best financial etiquette is to hit the rewind button and decide on a plan before the wait staff takes your orders. Ask everyone as soon as you sit down: “Would you rather split the check, or do separate orders?” According to a TD Ameritrade survey, millennials are slightly more likely to split the bill when dining out with friends (49 percent) versus pay separately (38 percent).

Figuring out what you want to do ahead of time prevents a big hassle for the wait staff later in splitting out the checks. It makes sure everyone is comfortable, and it reduces check anxiety throughout the meal. If speaking your mind doesn’t always come naturally, this can be a little uncomfortable, especially if your opinion deviates from the consensus. But again, it’s better to deal with the discomfort head-on than to strain your budget.

Buying gifts as a group

Have you and your friends or coworkers ever gotten excited about going in together to buy someone a pricey gift? Again, the key here is good communication. If you’re the organizer, ask everyone what they’re comfortable contributing and propose something within that price range.

Or, if a group asks you for more money than you’re willing to fork over, try saying something like: “I’m sorry. I can only afford $15.” They may be grateful for your contribution, but if they won’t take that, you can buy a gift on your own terms instead. If someone puts you on the spot about pitching in for a group gift and you don’t want to contribute at all, you might say you’re considering buying your own gift.

Planning group trips

Similarly, when planning group trips, a good rule of thumb is to scale it back so everyone included can afford it. If you’re the organizer, be upfront about the base cost of the trip, as well as any group excursions while you’re there.

If someone’s budget is lower than the rest of the group, you have two options.

It’s okay to ask your friends if they’re willing to accept your financial help. And you don’t have to directly give them money, which can feel awkward. You can offer to share a room with them, or use your points to book them a flight.

You can try to arrange excursions so no one has to overspend or miss out on something they want to do. Perhaps one day could be a spa day for some and a hike or museum tour for others.

If you have the lower budget, it’s important to take charge of your situation. Rather than trying to nix pricey plans for the whole group, come up with an alternative for yourself and leave the invite open for anyone who might want to join you. If you think you’ll have to pass on most experiences and don’t have another friend with similar needs, you might want to reconsider going on the trip. It puts you and your friends in an awkward situation if you’re constantly venturing out by yourself.

Asking for donations

Whether you’re asking for donations to fix your car or for a charity you’re raising money for, there are a few good financial etiquette tips to keep in mind. First, keep the donation requests to a minimum. If you’re always asking for money, it’s easy for people to become annoyed or to tune you out.

Second, be prepared to explain how the money will help. If you let them know why a particular charity is so important to you, or how much their money will make a difference to you, people are more likely to open their wallets.

Finally, don’t put people on the spot. Though it’s the easiest way to get a response, it’s also the easiest way to make someone feel manipulated into donating. Send out a broadcast to your network via email or social media. Give them a chance to choose to help or not help, proactively.

Borrowing money

About a third of people regret lending money or co-signing on a loan for friends and family, according to a 2019 Bankrate survey. A lot of things can go wrong, which is why some people have a strict no-lending policy.

But if you choose to borrow from or lend to a loved one, keep these rules mind.

Don’t lend any money you can’t afford to lose.

Make the agreement formal. It might feel odd, but put it in writing and include the consequences for not paying. That way, everyone is upfront about what they need to do, and what happens if they don’t.

Paying for weddings, bachelor and bachelorette parties

There’s no doubt about it: As lovely and memorable as weddings are, they’re also expensive. The average cost of attending a wedding as a guest is $460. If that’s not within your budget, it’s okay to scale back your involvement or skip it entirely. If you just can’t afford a $500 plane ticket, consider sending a handwritten card and a gift instead.

If you know you’ll be spending on flights in the future, you may as well be earning points and miles that you can put toward a free fight. The best travel credit cards offer boosted rewards rates on travel purchases, and some even offer sign-up bonuses worth $1,000 or more.

If you’re planning a wedding-related party, it’s a good idea to reach out to the most important people well in advance. Float some of your ideas with them before you make firm plans. Ask them: “We were thinking of a destination bachelorette party to northern Michigan, is that something you’d be interested in? What about a weekend at an Airbnb nearby?”

Venmo

Opinions vary about Venmo etiquette, but most people agree on the fundamentals: Get the transaction done in a timely manner. Don’t dally. Same-day repayment, whether you’re sending or requesting, is best for both parties.

If you’re requesting money from someone, it’s nice to give them a heads-up through their preferred method of communication first. For example, if you usually converse through Facebook Messenger, shoot them a quick message first, letting them know they can expect a Venmo request and for what. Feel free to use emojis to keep it fun.

Sharing information on salaries and expensive purchases

Another big tide change among generations is whether it’s acceptable to discuss how much you earn and how you spend it. In a recent Bankrate survey, 42 percent of Gen Z workers and 40 percent of millennials had shared their salary with coworkers, as opposed to a mere 19 percent of baby boomers.

That said, there are tactful ways to ask about someone’s salary. Don’t ask your coworkers while they’re on the clock. Wait until you’re at an outside event like a happy hour, and test the waters by saying something like: “On Glassdoor, the average salary for our position is $40,000. Do you think that’s accurate?” That can lead to a discussion of what you both earn if the other person is open to it.

Maybe it’s the culture of increased sharing or the familiarity of being saddled with hefty student loan debt, but it’s becoming more acceptable to ask about how much you pay for things, too. In a 2017 Realtor.com survey, 81 percent of younger folks had no qualms asking about a home’s price, whereas people from older generations were equally split on whether they considered it a faux pas.

If you’re on the fence about asking and you really want to know, a good way to test the waters is by asking a broader question like: “How much are homes in this area going for?” That allows the person to be as specific or general with the information they give you as they’re comfortable with.

The bottom line

As you grow into adulthood, you’ll realize that everyone manages money differently, and some have more to work with than others. But navigating those differences doesn’t have to be difficult. The key is being open about your situation and what you’re comfortable with upfront, and being respectful of others’ situations. This can be intimidating at first, but the discomfort will fade with practice.

Written by
Lindsay VanSomeren
Lindsay VanSomeren is a former contributor to Bankrate who started out racing sled dogs and studying wildlife biology in Alaska, without a care for money or finances. She quickly pivoted toward personal finance, though, once she saw how powerful an impact it had on improving her family's life. VanSomeren has written on personal finance and credit for websites including CreditCards.com, LendingTree, Credit Karma and Forbes Advisor.
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