Friends with Money: How to Handle Peer Pressure

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Most of our friends are in similar financial situations to our own. The people we work and play with come from similar groups, and generally have similar incomes. But most of us have a few friends who seem to be loaded, while others struggle to get by. And some friends are spenders while others are savers.

These financial differences can lead to awkward moments. Maybe you need to buy clothes this weekend, but your best friend wants to hit the mall instead of browsing thrift stores. Or maybe your coworkers like to celebrate every birthday by going out for drinks. Even minor differences in income can lead to misunderstandings and hurt feelings.

Still, it’s possible to enjoy the company of your friends without going broke. The key is to recognize that peer pressure is often internal; it comes from a desire to fit in. When you recognize that you don’t have to spend to impress your friends, much of the pressure goes away.

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Here are some simple ways to cope with social spending situations:

  • Explain your goals. Let your family and friends know that you’re trying to get out of debt or are saving to buy your first house. Ask your friends to help you be good rather than pressure you to do something you’ll regret later.
  • Suggest low- or no-cost alternatives. If your friends want to go to a movie, suggest a matinee. If they want to dine out, name a restaurant you know you can afford. (Better yet, suggest a potluck.) Bike or run together. Go hiking. Play cards or board games. There are tons of ways to have fun without breaking the bank.
  • Budget for social spending. If your circle of friends makes a regular habit of going out, consider building the expense into your budget so it won’t catch you by surprise. If your friends go to happy hour on the first Thursday of every month, for example, set aside $20 to join them.
  • Leave your wallet or purse at home. If you’re worried that you’ll give into peer pressure, create a self-imposed limit. Take $10 or $20 with you, but leave your credit cards behind. If you don’t have the money with you, you can’t spend it.
  • Limit yourself. Do things with your friends, but spend less. Join your friends for happy hour, for instance, but munch on the free food and buy only one drink. If your friends want to buy more, let them — but you don’t have to.
  • Opt out. If your friends regularly do expensive things, politely bow out from time to time. By playing poker only once a month instead of once a week, you could reduce those costs by 75%. If your friends like to go shopping, join them for the companionship, but make it clear you’re not buying anything. If the temptation to spend will be too much, don’t go at all.
  • Don’t keep score. Don’t obsess about what others have or don’t have. Don’t focus on the stuff — focus on the relationships. This can be tough, but it does no good to ask yourself why you don’t live in a fancy 4,000-square-foot home on five acres. Life isn’t a competition. Your goal is not to keep up with the Joneses; it’s to do what’s best for you.

Finally, remember that peer pressure works both ways. Your friends influence you — and you influence them. Don’t put people into situations where they’re forced to compare themselves to you. Respect your friends when they say “no,” and don’t try to push them to spend if doing so makes them uncomfortable. Don’t suggest expensive activities to friends who have other financial priorities, and don’t brag about money or flaunt it.