Are Your Friends’ Spending Habits Killing Your Budget?

by Gary Foreman

Are Freinds' Spending Habits Killing Budget photo

Trying to keep up with expensive friends can kill your budget and put you in debt. Here are some things you can do when your friends always want to spend more than you can afford.

Dear Dollar Stretcher,
I have a hard time managing my money. I have an active social life, and I enjoy going out. Sometimes I feel the need to keep up with my friends’ spending habits.

Do you have any recommendations on ways that I can stop spending as much, but still continue to go out with my friends?
Nathaniel from Portland, OR

Expensive friends. We’ve probably all known a few. People that we enjoyed being with who had the ability or willingness to spend more than we could or should

At some point, like you, we recognize that we need to make some changes.

But what should those changes be?

Let’s see if we can’t create a strategy that will help you find the best answer to your problem.

Little Luxuries

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Is your entertainment spending more than it should be?

The first thing to do is to see if your entertainment spending is more than it should be. Entertainment is typically about 5 to 6 percent of your budget.

In your case, entertainment is important, so you might spend a little more than average on it. That’s not a problem as long as you spend a little less in some other area.

Are you willing to cut back in other budget areas to have more money for entertainment?

This leads us to the next question. Are you willing to cut other expenses so you have more money for going out?

By driving an older car or living in a cheaper apartment, you might keep your total spending in line. There’s nothing wrong with that. It’s simply a way of prioritizing your spending.

Assuming that’s not possible, then you have some decisions to make.

Why do you feel the need to keep up with your friends?

You say that you feel the “need to keep up” with your friends.

You might want to try to understand why that’s important to you. Perhaps you might consider a session with a trained counselor. Sometimes understanding why we do something makes it easier to change our behavior.

At this point, you’ll need to either try to change some of your friends’ activities or not be involved in all of them.

Some things you can try

Try to steer your friends to less expensive outings. Instead of dinner out, would they be willing to just go out for coffee and dessert? If you’re clubbing, don’t go for the whole night. Rather, limit the amount of time you’ll be out.

Many “going out” experiences can be duplicated in less expensive surroundings. For instance, friends that used to visit a new restaurant each week are now taking turns hosting small dinner parties.

You might want to try something new but similar to your current outings. If the people in your group are regulars at happy hour, perhaps you could get them to take a bartending course. If they’re interested in restaurants, maybe they’d consider taking a cooking class at the local night school.

Or replace your current outings with something entirely different. Some groups go out as an excuse to get together. If that’s the case, where you go isn’t important. What’s important is that you do it together. Suggest that the group go do some volunteer activity together. You’ll build some amazing shared memories.

Have you overspent your way into debt?

Make a plan to get back out. Get How to Conquer Your Debt No Matter How Much You Have and create a debt payoff plan personalized to your budget and lifestyle.

What if your friends don’t want to occasionally give up the expensive outings?

Ultimately, if your friends aren’t flexible, you may have to make a decision. You can keep your friends or your credit score, but not both. It will probably be a hard decision to make, so choose carefully. But, remember that those friends won’t be able to help when you begin credit counseling or file for bankruptcy.

If you do decide to break some old ties, finding new frugal friends isn’t that hard. Strike up a conversation with someone that you’ve met at a thrift store or garage sale. Make friends with some of the people at your DIY class. Your new friends will share your desire to save money.

You’re wise to address the issue before it causes you too much financial trouble. It’s better to anticipate a problem and avoid it than to suffer unexpected consequences.

Reviewed March 2021

About the Author

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.

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