“Show me your friends and I’ll show you your future.”
Your friends you surround yourself with have a significant impact on your financial life. Your friend’s impact can be clearly positive. People who are ambitious will make you more ambitious. They’ll talk of new project they’re excited to work hard to accomplish. They encourage you to stretch yourself and help you prepare to ask for a pay raise.
Friends also create challenges in your financial life. When you sit down and catch up, you’ll inevitably talk about “what’s new.” We Americans don’t tend to say: my health is good, I’ve taken up cooking or I reached my Emergency Savings goal of $3,000! We update our friends about material things: like a trip to Mexico, a new car, or even the new couch your sitting on right now as you two are catching up. These conversations influence us to think, “do I need a vacation?” or “maybe I need a new car”. Psychologists call this “relative deprivation.” Relative to your friend, you feel deprived of life’s luxuries.
The best solution I’ve found to this feeling of lack is to “own-it.” Own the decisions in your life. No need to be ashamed. I “own” that I drive a 15-year-old pick-up. What could be perceived as a negative is now a positive. I don’t have a car payment, I have cheaper insurance, it gets good gas mileage. I like that. Similarly, I own that I live within a budget and I can’t spend as freely as they are. You wrestle back a lot of power with a budget and what fits in and what doesn’t.
Being open, you give them the courage to be open with their friends about the spending sacrifices they are making for a long-term happier life. It ripples out from there. Be aware of your influences and surround yourself with good people. You are influenced by others, but what that means as well, is that you can influence others.