How Not to Move Back in With Your Parents
Affording Your Social Life Podcast Episodes
Financial Peer Pressure
Listen to the Podcast
Pete and Alex and special guest Phil talk about how financial peer pressure is a constant throughout life and we learn a deep dark secret about Phil.
Read the Show Notes
Starting in high school, no matter how old we are, financial peer pressure is always there. It may change its form, but we are constantly looking and listening to others for cues on how we should operate financially. This strategy is incredibly dangerous because it can cause us to separate ourselves from our actual financial situations. It is incredibly important to learn about how financial peer pressure can manifest itself throughout life.
Alex says in this week’s podcast that at no point in your life will you feel more financial peer pressure than in college. To some extent, he’s right. The combination of it being most students’ first time handling their own finances and encountering people from a wide range of backgrounds, financial peer pressure in college can be extremely acute. As a society we tend to lean towards emulating the lifestyles of those who have, rather than have not, which can lead to serious financial problems for those trying to live lifestyles they cannot afford.
The social aspect of financial peer pressure is the biggest problem, and understandably so. We know you came to college to get a degree, but we also know that you came because you wanted to participate in the social life that comes with it. In our first season of “How Not to Move Back in With Your Parents,” we talked about the social costs of college and how they can hurt you if you ignore them. Your financial situation is unique, meaning it is more than likely that nobody will truly understand all of its intricacies. You need to make sure that you are living within your own means and not somebody else’s. Be honest with your peers, and let them know you can’t do everything. While it’s not the easiest thing to do, we’re fairly sure that they’re not going to stop trying to hang out with you because you can’t afford to do everything. Besides, as every father says, “If they’re going to stop hanging out with you because you don’t have a lot of money, then they weren’t really your friends to begin with.”
More importantly, caving into financial peer pressure is dangerous because once you adapt to a certain lifestyle, it’s really hard to go back. This is why we always advocate tempering your expectations and living a more modest lifestyle while in college: You will not only spend more money while in college, but you’ll also end up spending more money once you’ve graduated and are living on your own. This means it will take you even longer to accomplish some of your long-term goals.
Speaking of your post-graduation life, financial peer pressure will still be there, but just not as in-your-face as it is during college. Financial peer pressure after you graduate doesn’t come as much from peers, but rather society and the expectations of what you’re supposed to do/have with your money at various stages of your life.
As Pete says, post-graduation, you spend money to maintain status. You don’t want to be the one person your age or on your block who doesn’t have a big screen TV, or a nice car, or a house, or a fancy wedding, or anything else along with these lines. It is incredibly difficult not to cave into this pressure and live a lifestyle that only aligns with what you can afford. When you think about all of the different jobs that people have, you start to realize that it’s impossible for some to live the lifestyles of others because of the disparity of incomes. Think about it: What if you’re a doctor and your best friend is a teacher, and you want to go out to a nice dinner? How do you think your best friend would feel if you wanted something really fancy and all they could really afford was a casual-type place? How do you think they would react? How would you feel if you were the teacher? How would you react?
Although the social components of financial peer pressure aren’t as strong after college, that doesn’t necessarily include the peer pressure you face with your family. A stressful life at home with a spouse/partner and any kids you might have is not ideal, meaning you want to do what you can to keep them happy. Often, the easiest way to eliminate stress is to spend money on things – food, toys, entertainment, vacations, etc. It’s important for you to avoid conforming to the pressure of spending money to keep others happy. You’ll find, too, that spending money on these types of things is only ever a temporary fix and doesn’t really alleviate the stress of life at home.
What to Do?
If financial peer pressure is always around, what can you do to lessen it? As Alex says, the best thing to do is to establish goals. Having goals gives your finances purpose and gives you a justification besides just saying “no” to a request to do something that costs money. If you’ve been a regular listener to the podcast, you know that Alex is planning to go overseas this summer and backpack around Europe. You also probably know that he’s managed to work over the summers while in college, meaning he’s been a regular contributor to his bank account. Alex has two options with this money: conform to peer pressure and spend his summer earnings on various things in college or hold on to his money and use it to accomplish his goal of going to Europe. In Alex’s case, he’s found that having that goal has kept him focused and prevented him from overspending on things that don’t matter as much compared to going to Europe.
It’s also important for you to understand that others’ success is merely you perceiving that they are successful. Just because a person has a large house, nice car, goes on exotic vacations, or eats out and goes to bars every night, doesn’t mean they can actually afford those things. It could mean that they have accumulated lots of credit card debt or that they are using student loans to pay for all of that excess food (FYI: Don’t do this!). You don’t know the story behind their lifestyle. You should only focus on your lifestyle and what you need and not worry about others. One great thing you can do is to start learning about yourself, your habits, your needs, and your wants. Knowing yourself will greatly help you stay grounded in your spending and help you avoid the temptation to live somebody else’s lifestyle.
Also know that you will probably make some mistakes and unwise decisions based on pressure, and that it’s ok. The important thing is to reflect on the mistakes and make sure that you minimize the likelihood of having them in the future. The sooner you can learn how to live your own lifestyle, the sooner you’ll be able to have a much more comfortable lifestyle and avoid the stress of financial peer pressure.Season 4: 02/02/2015