Are your friends keeping you poor?

This post is from staff writer Suba Iyer.

Do you spend more when you go out with friends than when you shop alone?

Did you go to a particular restaurant with a group of friends just because you didn’t want to be labeled a tightwad by bringing up how expensive it is?

Welcome to the world of peer pressure!

All of us feel peer pressure; the reason and the extent to which we give in might vary. For example, I have seen my father being a completely different person in front of others. My mother is pretty frugal (not cheap), but for some reason, my father doesn’t want people to think he is “that” kind of person, so he over compensates to make sure everyone around him understands that he is not hurting for money by buying things he normally wouldn’t if he was alone. Seeing that has put me on guard, but I still struggle to say no when it comes to a professional setting or if a charity is involved. I feel like a jerk for saying no to the grocery store clerk when she asks me if I want to feed a hungry child. I feel like running away, hiding my face and never being seen in that store again!

But, it boils down to no one cares about my finances more than I do. No one knows about my money more than I do. So it is my responsibility to say no when I should. How can we accomplish that without feeling left out or overcoming the desire to fit in?

• Remember they are your friends: When you go out with your friends you are there to enjoy their company, not to impress them with your wallet. You can still have a good time without going broke. True friends will understand your priorities and support your goals, but only if you…
• Talk about your goals: Your friends are not mind readers, if they are good friends they probably don’t care how much you make, spend or save. That means, they probably have no clue you are struggling with debt or saving for a down payment. Speak up. Let them know you are seriously trying to get out of debt and cannot afford to go out to an expensive restaurant. If you are close enough, make yourself accountable to them,  share your goals, and ask them to keep you in line if you ever get debt payment fatigue.
• Honesty is the best policy: If your friends don’t understand your goals and still insist on going shopping or for drinks frequently, there is nothing wrong in saying “I would love to join, but I can’t afford it this time, ” or “I like this dress but it is out of my budget.”
• Budget for social spending: You don’t have to reject every single invite; budget a particular amount for social spending. That way you will have a clear idea on what invite to accept and what to pass on. Decide what your priorities are and budget accordingly.
• Become a trendsetter: If your friends never talk about money, break that taboo. May be they are in debt too and are just embarrassed to be the first ones to talk about it. Or they might genuinely not know or not looked for frugal alternatives. When you start suggesting fun things to do that don’t cost anyone money and are not being a pain about it, they might start seeing you in a new light. You might become their new frugal diva that they can go to for financial advice.
• Suggest low cost alternatives: If your friends absolutely want to go out and you want to join them, suggest a low- or no-cost alternative. If you want to go for drinks, suggest happy hour in a restaurant that takes coupons. Want to go to the movies? Try a matinee. Dinner get together? How about a potluck? Go hiking together, play board games at home, or have a movie marathon. There are tons of fun stuff to do that don’t cost any money.
• Avoid putting yourself in an awkward position: These days, I try to use the self-checkout as much as possible to avoid the charity question from the clerk. Same deal with friends. If you want to join your friends for shopping, go ahead but at the start of the trip make it clear that you are in for the companionship and not buying anything. If you know you will be tempted to spend, do not go at all.
• Remind yourself of your goals: Recently, I have been following this to answer the “Do I want to donate a dollar to stop child hunger?” I remind myself that I have a charity budget and I do donate generously directly to the charity. Only a fraction of the $1 I donate to the grocery store will go to the cause, whereas my direct donation will have a lot more impact. If I think of why I am saying no, it makes me a lot more comfortable to stand my ground.
• Surround yourself with like-minded people: There is a quote by Jim Rohn: “You are the average of the five people you spend the most time with.” That is absolutely true. If all of your friends are pretentious, keeping-up-with-the-Joneses type of people and you are an aspiring millionaire next door, do you really want to keep spending all of your time and energy with these people? You will reach success a lot faster if you surround yourself with people you see as your role models or who think like you.

Peer pressure works both ways; your friends can influence your decisions and you can influence theirs. If you are financially better off in your peer group, make sure you are respecting your friends’ decisions if they say no to an offer. The only thing that matters is the relationship we build with other people, not how many flat screen TVs or brand-name suits we have.

Do you feel the pressure to spend differently when you are with your friends? How do you cope with peer pressure?