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How Friends Can Influence our Finances and Money Decisions

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We all need friends in our lives, the great ones make us happy, offer free therapy, increase our sense of belonging, and encourage us to improve ourselves.

Some of us have friends we like, but can be “energy vampires” at times, they suck up our time, energy, emotions and sometimes our money.

The people we hang out with have a huge impact on how you live your life and the choices you make. As amazing as it is having all kinds of friends, you do need to be careful that they’re not causing you any financial strain.

Let’s look at the different ways how our friends can influence our finances:

1. They Influence your Spending

I think this one is obvious. Our friends call us and plan a night out – eating, bar-hopping, a movie, and so on – we end up spending money.

Now, it’s not all bad, the camaraderie and the fun is worth it. We relieve stress, create new memories, and truly enjoy ourselves.

The problem usually happens when we say “yes” too often, start having negative consequences, dread going, or our friends start mooching off of us.

Let’s look at how much it can cost to go out to a bar every Friday and Saturday night in a month:

  • $520 for drinks
  • $80 for late night meals
  • $96 – $120 for RideShare (Uber, Lyft)

That’s roughly $696 – $720 a month for weekends bar-hopping. I didn’t even count tips, door cover charges, party wardrobe, and hangovers (which can be the costliest, right?)

If you said “No” more often and only went out one night a month – that’s only $87 – $90. That’s a $609 – $630 savings!

The same goes for shopping trips, weekend excursions, concerts, vacations and other money-sapping events.

Help yourself and your friends save even more money by creating different budget-friendly ways for entertainment and still enjoy yourselves.

2. You’re Keeping Up

We have friends that are from different social classes than us, which is fine because you learn from different viewpoints and experiences. The problem starts when you start feeling the need to keep up with those that are more affluent than you.

You can imagine the following scenario:

Your friend pulls up in a new 2019 Lexus RX worth $43,800 while you’re driving a used 2009 Mazda CX now worth $10,000. Now you’re fantasizing about upgrading – or even going ahead and upgrading to a newer model (and getting into deeper debt) just to be “one of the guys”.

The difference between your 2009 Mazda and a newer 2019 model is $20,000 to $35,000!

Don’t be tempted to go into debt trying to “keep up with the Joneses”. This also goes for grabbing the newest released product, a bigger upgrade (tv, house, etc.), or to accumulate “more” just for the bragging rights.

Your true friends won’t care about how much you make or don’t make and won’t make you feel bad about it either. It’s human nature to want what your friends have, but the trick is to learn to be comfortable with you are and what you own.

3. They Influence your Career

Our friends can influence how we view our careers and jobs.

We all seek approval and affirmation from our friends and we all want to be part of the group. That need for acceptance can influence you to hold back your career goalss for fear of not fitting in with your social circle.

Also, if your friends are the people you work with, you may even decide you don’t want a promotion for fear that it will interfere with your relationships.

Now, if you’re holding back on your career goals and promotions the end result is how much you will make.

Simply put, if all your friends did not pursue further education after their Associate’s or Bachelor’s so you decide not to pursue your Master’s, or they discouraged you from doing it – you’re missing out on a potential $20,000 to $30,000 increase in your earnings.

4. They’re Moochers

We all have (or used to have) a friend who’s regularly borrowing stuff or asking for some money from you.

There’s the one who borrows your outfits, habitually doesn’t have enough to pay for their part of a meal or bar tab, or seems to be in “dire need” of help often.

These friends don’t often realize (or don’t care) that you have financial obligations or may not be doing it on purpose, but they’re draining your wallet and you need to remind them of their debts to you. If they continue to make up excuses why they can’t repay, or bring up past favors they did for you – it’s time to cut them off.

You can continue to be friends if you want, but you shouldn’t offer any more generosity to them.

5. They’re Manipulators

Some of us have friends who will manipulate us financially.

I can think of a few ways how they do this:

  • They are involved with a direct-sale company and tries to make a sale or two off of you.
  • They get you to sign up for a good “deal” they got from a company or service. You might end up paying more because it wasn’t a good match for your needs.
  • Your group decides to chip in for a group gift, but the amount is more than you wanted to give.
  • They’re often asking for donations for one charity or another.
  • They’re extravagant gift givers and you feel guilted into giving just as expensive in return.

Whatever the manipulation being used it’s not healthy, either mentally or financially, to continue letting them take advantage of you. You need to learn to be firm and say “I cannot do these things for you anymore”. Otherwise, you’ll continue to struggle financially.

6. They Question your Spending

Lastly, there are the friends that question you about your buying and spending.

Maybe you’re shopping with them and they make remarks on your purchases such as “You’re going to spend that much?”, “Isn’t that cheap?” and other snide comments.

They’re curious about how much you make, how much you own, how much you owe and so on. It’s understandable that your friends are curious and you have every right to brush them off or tell them it’s none of their business.

But if they are demanding to know, you better assume they have negative intentions, you do not need to defend yourself – drop those friends like a hot potato. They have nothing positive to contribute to the friendship.

Final Word

Your friends are supposed to be your support system, your “cheerleaders” and care about you in all your endeavors.

Genuine friends are supposed to:

  • Show honest interest in what’s happening in your life, what you’re saying and how you’re feeling.
  • Accept you for who you are.
  • Listen to you without judgment, not telling you how you should think or feel, or try and change the subject.
  • Feel comfortable about sharing their lives with you.

If you’re still not sure about some friends you have, then ask yourself:

  • Do I feel good after spending time with them? Do I dread it or avoid them?
  • Am I actually “me” around them? Or do I take on a different persona?
  • Do you feel comfortable, or do I feel I need to “watch what I say”?
  • Do you feel respected?

If you’re not getting any of this from your group of friends, then maybe it’s time to find a new social circle.

Dropping old friends and seeking a new group can be nerve-wracking, but here are a few steps to ease the transition:

  • Join different Interest groups – Find a hobby or interest group in your city and join them and interact with other members.
  • Join MeetUp – Find free meetings, get-togethers, workshops and much more.
  • Go to different events – Cultural, music, food, tours, and more, and chat with other attendees.
  • Volunteer – Give your time at different charities and meet other workers there.
  • Spend more time with co-workers

I know it takes a lot of guts to get out there and experience new things, especially if you’re introverted like me, but honing your social skills and boosting your self-confidence is a fun adventure in itself.

In the end, your happiness and your finances are much better off.

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