As the old saying goes, “tell me who your friends are and I will tell you who you are”. Apparently, this also rings true in money matters. Your friends can influence your thinking and behavior in many ways, including your choices when it comes to your finances.
Your friends may influence you to spend more
Let’s say you and your friends are deciding where to have dinner. You are on a tight budget and don’t want to spend so much on food, but your friends insist on going to an expensive Italian restaurant. In this situation, you will likely tag along with your friends.
According to a study published in Psychological Science in 20131, people with low self-control depend heavily on the influence of the people they usually hang out with. If you notice that you always follow their lead, you might have to assert yourself more because the seemingly small choices that your friends make for you may already be compromising your financial future.
You may have friends who fall on either extremes of being financially careless or being financially successful, so if your friends influence you to spend beyond your means, then it is time for you to make a choice for yourself.
Friends have a strong influence on your lifestyle. If your friends love to travel, more often than not, you will likely want to join them in their travels. If they like to spend big on clothes or night outs, you might probably just do the same because you don’t want to be left behind.
In a study about the effect of friends on spending habits published in the Journal and Consumer Research2, researchers found out that a person tends to risk financial security over the security of social bonds.
You may have experienced being at crossroads on whether to stay at or to leave your job because you are afraid to leave your friends behind. People tend to choose the comfort and familiarity of being around people they are close with, rather than better career opportunities to prepare for their financial future.
Your friends may take advantage of your connection
You may have been invited by a friend to a coffee date only to be surprised with a sales presentation. You may have friends who ask you to support them by asking you to buy things you don’t really need. This may seem harmless, but if you can’t say no every time they give you a sales pitch, they may be forcing you into making bad spending decisions.
In situations like this, know when to draw the line because your friendship may be costing you more than it should.
Knowing that friends have a big impact in your life – whether financial or otherwise – then makes choosing your friends wisely a sensible move. You may have friends who have different financial habits and goals, but it is important to be aware of how they affect you and your decisions. As long as you don’t set aside your own plans and be coerced by peer pressure, you’re fine.
Ultimately, friendship is a source of support. If you have friends who are willing to provide you with understanding and support you need to ensure that you achieve your financial goals, then you are lucky enough to have found friends worth keeping.
1 Association for Psychological Science. Low on Self-Control? Surrounding Yourself With Strong-Willed Friends May Help
2 The University of Chicago Press. Are Consumers with Fewer Friends More Likely to Take Financial Risks