If you’re overspending to keep up with your friends, you’re not alone. In fact, one survey found that almost 40% of millennials have gone into debt trying to match their peers.
The problem isn’t restricted to the younger generations or any particular income level, says Kate Dorman, a clinical social worker, financial therapist and owner of Sound Financial Therapy in Seattle. “I hear about this issue from clients who make $50,000 and clients who make $200,000,” she says.
The internet has changed how people compare their financial lives to others. While in years past, you might have been tempted to redecorate after seeing a neighbor buy new furniture, “now, people compare their reality to a construct on social media,” Dorman says. “But what that person’s reality is, you don’t know.”
Whether you’re blowing your budget by splitting dinner bills or reciprocating over-the-top kids’ playdates, follow these tips to keep money tensions from creating a rift in your friendship.
Overspending to keep up with friends isn’t sustainable, either financially or emotionally. At first, you’re likely to feel unsatisfied because you’re not spending money in a way that’s aligned with your goals and priorities, says Dorman. Over time, bigger problems could develop.
“You can end up in a shame spiral. You overspend, and then you feel bad, and since you feel bad, you spend more money,” says Caroline Wessling, an associate marriage and family therapist based in the San Francisco Bay Area. If the spending keeps rising, you can end up in debt or even declaring bankruptcy, she adds.
Before you broach the topic with your friends, take some time to think about your own beliefs about money and whether they could impact the conversation, Wessling suggests. For example, do you believe that talking about money only leads to arguments?
Also, consider the role you play in your overspending. For example, is spending how you show someone you care? If you aren’t clear about your own money beliefs, you may not truly be open to what your friend has to say.
Breaking the cycle of overspending starts by breaking the ice with your friend. Let them know you treasure the relationship and the time you spend together.
Dorman recommends starting with, “I’ve been thinking a lot lately about my finances, and I’ve been feeling stressed that I don’t earn as much as you. I really value your friendship, and I’d appreciate it if we could spend some time together without spending money. That would really help alleviate some of my stress and allow me to enjoy spending money together when we do decide to do that.”
Wessling suggests openly acknowledging that the discussion might not be easy. “You can say, ‘I know this is awkward, but I've been struggling a bit lately with my spending. I wanted to talk to
you about that and how it’s affecting our friendship. Are you open to having a conversation?’”
Don’t feel like you must settle everything in one sitting. If a topic you weren’t expecting comes up, or either of you start to feel uncomfortable, you can always take a break and resume the conversation later.
Instead of commenting on your friend’s behavior, let them know how you’ve been feeling. For example, Wessling suggests saying, “I’ve noticed I'm not sticking to my financial goals lately. I want to reduce the amount I'm spending on going out.” Avoid saying, “You always want to do high-cost activities, and you don’t seem to care how that affects me.”
Dorman has another caution: Don’t make assumptions about your friend’s financial situation, blame your friend for making more than you do or criticize them for how they spend their money.
Be willing to listen to the other person’s perspective and present a solution if you feel comfortable doing so, Dorman advises. However, don’t give up on your own boundaries if your friend doesn’t listen or understand. For example, if your friend continues to ask you to do high-cost activities after the conversation, Wessling suggests a simple response like “That sounds like a lot of fun, but it’s not in my financial plan. Would you like to meet up for a coffee?”
Be open to all the ways the conversation could turn out. For example, your higher-income friend might offer to pay for meals, activities, or travel for you. Would you be comfortable with that? Or your friend might be stressed about their own spending. How will you respond?
Even though you may feel apprehensive about having a conversation like this, there’s no reason to expect the worst, says Wessling. “You will probably be surprised to find out just how much other people are feeling the same way as you,” she says. “A lot of people have a lot of anxiety about money and feel this same pressure to spend and keep up with others. You could very easily find that people are relieved to hear you put it out into the open, and you could actually end up supporting each other to reduce your spending and be more mindful.”
Watch this video for tips on how mindful spending can keep you and your money on track.
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