How to Turn Financial Peer Pressure Around

by Guest Contributor · 11 comments

There’s an old saying that goes something like this:

Show me your friends, and I’ll show you your future.

In my experience, it’s true. We seek to fit in with those around us, and that applies every bit as much to money-related decisions as it does to other life choices.

Money-Related Peer Pressure

It’s obvious when our friends and coworkers spend money. We see them going out to eat, going out on weekends, buying shiny new iPods, iPads, and iPhones. As a result, we experience peer pressure to spend–to “keep up with the Joneses.”

But it’s not obvious when our friends and coworkers save and invest money. You don’t see that Lauren has been building up her emergency fund or that Matt has been making big monthly contributions to his 401(k).

There’s a social taboo against talking about money (except to say that you don’t have any). It would be seen as bragging if a friend told you that she had written a check to Vanguard on January 1 to max out her Roth contribution for the year.

The end result of this taboo is that there’s more peer pressure to get into debt than get out of it and more peer pressure to spend money than to save it.

Creating the Right Kind of Peer Pressure

Of course, most people are resistant to the idea of ditching their friends and exclusively befriending wealthy people for the remainder of their lives. But given that, my suggestion for creating positive financial peer pressure in your life is this: Read. A lot.

If you read enough books, magazines, and blogs about investing, the subconscious part of your brain–the part that’s so sneaky about making you feel the need to keep up with everyone else–will eventually get the idea that investing is normal.

Everybody’s doing it.

Naturally, I’m particularly fond of blogs for providing this positive social reinforcement. Because they tend to be written by people other than financial professionals, they’re good for proving to yourself that regular people–people just like you–have made investing a priority in their lives as well. As an added bonus, these blogs serve well as a daily dose of motivation to keep you on the right track too. I read them, and I encourage you to keep reading!

About the Author: Mike Piper is the author of Investing Made Simple. He also blogs at The Oblivious Investor, where he explains topics like Roth IRA withdrawal rules and whether you should rollover your 401(k).

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  • J.W. Sym says:

    Good point about peer pressure. It’s always a bummer when you’re on a budget and your friends want to go do something expensive.

    I like knowing how my peers are doing financially to see where I stand. I found a while back and check it from time it time. This site organizes financial data by age, sex, and geographic location so you can know how much $$ people in your age group from the area you live in spend/save. It’s pretty interesting to look at.

  • small business financing US says:

    This is a very good saying “Show me your friends, and I’ll show you your future” and the author has explained it in the related article “How to Turn Financial Peer Pressure Around” which is good. I like the article..Thanks

  • Mrs. Money says:

    I hate being pressured by others about money. It really ticks me off. I’ve learned to block out a lot of people any more.

  • Ken says:

    There has to be a way to positviely encourage folks to be savers instead of spenders. The best one I’ve found is Financial Peace University. It’s a 13 week program on money management. Just like Biggest Loser…the real challenge is AFTER GRADUATION. Without continuous support and accountability many fall back into ‘impress others’ spending. Good post.

  • Monevator says:

    I’d never thought about this before, but you’re quite right Mike.

    I did save in secret at first, but after a few years started reading books to see where to deploy my money. Needless to say the authors spoke of behaviour very different to that of my high rolling chums.

    Later I got into investing via the Motley Fool boards. Nowadays I’m still active on the boards, plus I read a few good financial bloggers.

    David’s point is a wise one though — read different views to avoid getting into a self-reinforcing mindset. I made this mistake with property, I think, where even after the slump I would have been better buying in 2004.

    ‘We’ all expected a huge crash. Right, but too soon…

  • CD Phi says:

    So true. I don’t feel a need to go out with my friends every single weekend because we’re all on different budgets. There’s no need to play keep up if that’s just going to throw you into a financial debt rut.

  • Mrs. Frugal says:

    Great post. I wish my money savvy/frugal friends had discussed their lifestyle more with me when I was a spendaholic. I don’t preach but I am VERY honest and open about how we manage our finances and our goals.

  • Lakita (PFJourney) says:

    I agree 100%. When I decided to make a change in my financial situation I had one friend who was a great accountability partner. Nobody else could understand why I was doing what I did. I quickly learned talking about financial management, responsibility and stewardship to someone who isn’t ready to change will cause them to withdrawal. I started reading more and more blogs on the subject and realized that I was not alone.

    I agree with what was said above as well…I read PF blogs from those I agree with as well as those I don’t see eye to eye on.

  • MoneyNing says:

    Mike’s made some great points. I actually believe that it’s beneficial to read from bloggers that you DO NOT agree with. It’s easy for us to follow someone who are similar to us, and that has its benefits, but it’s often the opinions that contradict our beliefs that lead to growth.

    For example, you may want to read up on active management every once in a while if you are an index fund person. Or if you are into saving money, you may want to read up on people who supports making money more than saving.

    Doing so will give you the needed perspective to make your own decisions, and to improve upon what you already have.

  • 2 Cents @ Balance Junkie says:

    Great ideas. It’s not realistic to disown your family or ditch your friends if they are not interested in personal finance. The PF blog community offers lots of diverse opinions and ideas and there’s something for everyone out there. It can really provide the reinforcement you need to continue your quest for financial literacy and freedom – especially if those around you do not.

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