Most of us can agree that sharing is a cornerstone of friendship. Whether it’s a pair of shoes, quick perfume spritz, an order of truffle fries, or Find My locations, how much you share can be a pretty accurate measure of how tight the group chat really is. But lately, some friend groups are taking it one step further by sharing finances, too, in a concept being referred to as the “friend fund.”
A friend fund is a joint bank account shared between a group of friends and often used to pay for group vacations, birthdays, brunches, and other shared activities or investments. In a viral video from Louis Davis (@louisdavis____), the content creator shared that his wife shares one with her friends. “They all put money in every week to do whatever they want,” he says. “They go out to dinner, they buy each other’s birthday presents, they buy flowers when something bad happens, they go on holidays.”
When we think about sharing finances, it’s usually in the context of romantic relationships — like when couples open a joint bank account together after they get married. But according to financial counselor Markia Brown, it’s actually a pretty common practice in communities, too.
“Different cultures have their own version of community pooling,” Brown says. “In the Black community, we’ve been doing this for generations through susus . . . Korean communities have the gye. What’s new is the name and the viral moment, not necessarily the practice.”
Though mixing friends with finances may sound like a recipe for disaster, Brown says that, when done well, the friend fund can be a great way to maximize resources. Here are her tips on how to effectively have a friend fund without any drama.
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Markia Brown is a certified financial education instructor and accredited financial counselor. She is also the founder of The Money Plug® and Common Cents™.
What Is a Friend Fund?
“A friend fund is a shared pool of money among a group of friends that everyone contributes to and pulls from for shared experiences like birthdays, trips, brunches, whatever the group decides,” Brown says.
Exactly how your specific friend fund works is completely up to you. Though some people may choose to do weekly or monthly contributions, the amount and how often you invest can all vary. What you spend the friend fund on is also entirely up to the group. While one friend group may use the pool of money to go toward a group vacation, another group of friends may choose to use the resources for emergencies or when someone is in a financial pinch.
The Pros and Cons of a Friend Fund
Depending on what you use the friend fund for, it can often relieve friends from feeling any sort of financial pressure. “Nobody has to feel awkward about whether they can afford the birthday dinner or the group trip because the money is already there,” Brown says. A friend fund can also help build community and trust among your friend group. “You’re contributing consistently toward something that brings everyone joy — that’s actually a really healthy relationship with money,” Brown says.
“Community pooling has sustained families and friendships across cultures for centuries.”
That said, you also have to keep in mind the negatives. “If the group doesn’t have clear guidelines around what qualifies as a fund expense, who can pull and when, and what happens if someone stops contributing, things can get messy fast,” Brown says.
Brown says problems with friend funds aren’t normally about the money, but about the people. “Money has a way of making existing tension in a friendship louder. If there’s already an imbalance in the relationship, like someone who always overextends or someone who never follows through, a shared account will surface it quickly.”
How to Do the Friend Fund Correctly
To avoid a friend breakup, below are Brown’s suggestions on how to effectively do the friend fund.
Step one: make sure you actually trust the friends you want to go in on a fund with. “We sometimes extend trust in friendships because of the relationship itself — not because someone’s actions have actually earned it,” Brown says. “Before you pool money with anyone, ask yourself whether their actions match their intentions.”
Step two: decide on how you will pool the money. There are many ways you can create a friend fund. As a group, you can decide to make one person in charge and send them contributions each week, or you can open up a joint bank account. If you and your friends decide to invest in a joint bank account, however, make sure to do your research. “A joint bank account means everyone has access,” Brown says. “Understand what that means legally and practically before you sign up.” (If you go this route, Brown recommends investing in a high-yield savings account so the money can grow while it sits.)
Step three: establish the ground rules. Brown recommends getting aligned on how much everyone contributes and how often, what counts as a fund expense and what doesn’t, how withdrawals get approved, and what happens if someone wants out or can’t contribute for a period.
Step four: put everything in writing. Don’t just agree to a friend fund verbally. “Set it up like a financial agreement, not just a vibe,” Brown recommends. Even if it feels formal, she says this can help protect you from drama or problems later. “The friends who laugh at the idea of a written agreement are usually the ones who cause the drama later.”
Step five: start small. Don’t invest too much too soon, Brown recommends. “You don’t have to open with a big commitment. Test the dynamic with a smaller amount before you scale it up.”
Step six: designate one person to manage the account. At least quarterly, this person should “look at the balance, revisit the guidelines, and make sure everyone still feels good about how it’s being used,” Brown says. However, make sure you rotate this responsibility so it doesn’t always fall on one friend.
If you follow the above guidelines, a friend fund can work really well. “The concept itself is solid,” Brown says. “Community pooling has sustained families and friendships across cultures for centuries.”
Though a friend fund can seem like a silly financial investment to some, Brown reiterates that it’s about more than just splitting the bill at brunch. To her, she says pooling resources together is powerful, and something that communities of color have been practicing for centuries. “It’s about building a culture of shared abundance with the people you love,” she says. “Just make sure the foundation is solid before you build on it.”
Taylor Andrews is the senior balance editor at Popsugar, specializing in topics relating to sex, relationships, dating, sexual health, mental health, travel, and more. With eight years of editorial experience, Taylor has a strong background in content creation and storytelling. Prior to joining PS in 2021, she worked at Cosmopolitan.
