Are you catching bad money habits from friends?

By Marianne Curphey

Keeping company with big spenders can lead to big trouble if their habits rub off on you. Perhaps you have a friend who makes more money than you, or who simply has a "live for today" attitude and doesn't mind maxing out their credit cards to have a good time. Can you stay friends and stay in the black?

Why our friends are such big influences
Jane Cox, an international human performance specialist and wealth psychology expert, believes that some people feel they need to define themselves by their financial status because they are lacking in self-confidence.

"We live in a world where there is a lot of financial pressure to keep up, and social media has made this worse," she says. "When you see what your friends are doing on social media, it seems like everyone is going on a luxury holiday. In fact, for every one person who is heading off on holiday, there will be 10 others who are just having fun meeting friends for a coffee round the corner."unhealthy-spending

We feel we have to spend the same as our friends because we are worried about being judged, she says: "It's a lack of self-belief and self-confidence.
If your friend invites you on a shopping spree, it's fine to say you'd like to come, but say you'll share the fun without spending any money yourself.
A true friend will understand."

Cox explains that many feel the need to impress those who are more successful because they want those successful friends to pull them up
the ladder.

Of course, it may be that your friend is struggling financially, too, but feels that money is a reflection of success. So she keeps up the façade of spending, even if she can't afford it.

"Many people do feel that money is a reflection of success, even though real success might be that you are a brilliant parent or a really good
friend," Cox says.

Avoiding temptation
To keep your friendships and your budget intact, follow a few simple guidelines.

1. Be honest with your friends.
Being honest with yourself and your friends is the best policy. Otherwise, living above your means will leave you with debts that are tough to clear.

"Once you've exhausted your overdraft facility and taken out another credit card or a store card, there comes a finite point where you just can't generate any more credit, and then you're faced with having to sort out all this debt," says Cox.

It's better instead to enjoy experiences with friends, rather than thinking that spending is always the key to having a good time. "It can be hard if you are going out with friends and you know it is going to be costly," says Wilma Allan, founder of the financial advice blog The Money Midwife.

She recalls an occasion when she was invited out, but knew it would be expensive. "I told my friend that I was on a financial diet," Allan says. "I decided rather than make up an excuse, I would be honest and say that I just couldn't afford it."

As it happened, her friend appreciated her honesty and was fine about it. "If a good friend wants you to come shopping, think about whether you actually need anything. If not, it's OK just going for company instead," says Allan.

2. Be honest with yourself.
Allan says in order to resist the temptation posed by a spendthrift friend, it's important to be clear about your own attitudes and beliefs around money. "If you want to alter the way you handle money, it is definitely possible to change your money mind-set, but what you need is awareness," she says.  

In other words, you can't change your mind-set if you don't know you need to. If you recognize someone else's bad habits and strive to avoid them in your own life, you're probably going to be more resilient against picking them up.

"However, if you are not very aware of your own money attitudes, then you might look up to someone else who is not necessarily good with their money, and unwittingly be influenced by them," Allan explains.

3. Concentrate on the consequences.
"If you go and you end up spending a lot of money that you can't afford then you will end up feeling bad about yourself, and that is not a good mind-set to be in," Allan says.

In fact, she says, it can be empowering to take control and set boundaries around your spending.

"Be confident, and don't spend money you don't intend to," Allan says. "Otherwise you will end up feeling out of control, feeling bad, or worse still, blaming your friend."

See related: Stop debt collectors digging up dirt on social media, Social media is open door for thieves, lenders

Updated: 9 May 2017