Probably one of the biggest factors that keeps us from saving and investing is other people. Everyone will talk about how great it is when you go on a diet or start an exercise routine, but they are only too happy to guilt you into eating a jelly doughnut or skipping a morning jog. Trying to stick to a budget is probably even harder since at least your friends probably go on a diet or try to exercise at least some of the time. I’ll bet few of them really try to budget, and they are only too happy to help you go off of your financial diet.
And how often have you been doing well with your budget for the month, having been using your envelope system to pay for things like meals out and movies so that you won’t go over, when your friends invite you to go out to a club on a Friday night or out to lunch after church? Because you’re low on cash for the month, out comes the credit card and suddenly you forget how much money you’re spending until the bill arrives. Or maybe you’re on a trip and everyone around you is buying drinks even though they cost $10 each, so you buy a few too just to fit in.
Certainly it is difficult to hold back when you see other people spending money. I can’t say how many times I’ve seen a whole table of very full people order dessert once one person decided to order. Suddenly they were spending about half the price of another meal for food they didn’t really want just because someone else ordered.
Maybe there are some extreme cases. Maybe you got season tickets to a football team because your friend was doing so. Maybe you went on a cruise because a bunch of friends were going.
Probably one of the worst times is when you let other people who you don’t know spend your money for you. You buy a certain garment because it is a hot label and pay too much because other people are paying too much. You buy an expensive car because others around you are buying expensive cars. Maybe you choose a home because it is in a hot neighborhood or buy a dog because it is a sought-after breed. Here you’re letting people you don’t even know spend your money for you.
So how do you stop overspending when you’re with other people? It isn’t easy and it will take making an unpopular decision at times. Still, there are ways. Things you can do are:
1. Start planning inexpensive ways to get together. Some of the most fun I had in college was having another couple over to play cards. The cost was only a couple of pots of tea or a bottle of soda.
2. Hold back on some of your entertainment money for the last-minute invitation. Maybe hold back $50 until the last day of the month, then either spend it or roll it into the next month’s entertainment fund if there are no invitations to go do something.
3. Make a decision that you aren’t going to do anything that costs more than a certain amount of money, say $200, unless you’ve planned it for at least a month. No last-minute ski trips.
4. Be the designated driver when you go out. You’ll spend less money, enjoy the night, and be able to make sure your friends get home safe. <span style="color:#0000ff;"
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.