Having the wrong kinds of friends in Singapore can wreck your finances without you realising it.
One of the biggest influences on our finances is who we hang out with. Group activities, attitudes toward spending, and simple differences in social background all affect our own wealth.
Here are some key areas to look out for:
1. They Affect Your Hang-Out Venues, Which Brings Temptation
If someone is your friend, they more than likely share some interests with you. This often means hanging out at places that provide a lot of temptation.
If you like music and your friend likes music, for example, you may be visiting record shops more often than anywhere else. This choice of location is going to subject you to constant temptation. You’re around things that you’re both interested in, you’re picking things up, looking at them, discussing them…whipping out your wallet is the next natural step.
Friends also tend to update each other on the hottest new place for (insert hobby you all share). The next thing you know, you’ll be headed there with a big mob of them and ready to spend.
You might want to try hanging out in each other’s homes instead, or make a pact not to drop by the “place of temptation” more than once a month.
2. They Can Pressure You to Spend Without a Word
If your friends are wealthier, you’ll want to keep up (consciously or otherwise). Nothing is more painful that being the one in a cheap T-Shirt when everyone else is in designer wear, or being the one to suggest a food court when everyone is looking at high-end cafes.
On the upside, this might inspire you to work harder and earn more. On the downside, you might find yourself spending too much just to keep up. This can also result in pressure on both sides--your friends may feel pressured to dress down or hide their gadgets so you don’t feel bad, and you might feel some self-conscious in response.
The trick is to just talk it out. Explain that your finances are killing you right now, and you’re not embarrassed to have them acknowledge it. That will end the tension and make you feel less compelled to spend.
3. Your Spending Habits will Change to Match Theirs
Hang around stingy friends, and you might become equally miserly. Hang around the spendthrifts, and you will probably end up in debt alongside them.
If you have a friend who hoards coupons and haggles over a dollar, you may be enlisted to help at some point (e.g. “Help me cut out and organise these 30 pages of coupons!”). You will learn this habit, normalise it in your mind, and probably start to follow it without even thinking.
The reverse is true: hang around friends with $8,000 in rollover credit card debt, and your brain will start whispering that it’s normal. After all, everyone you know does it.
The best way to avoid this is to limit your exposure. Keep the friends, but maybe back away a bit for shopping trips or eating out. When you do go out, use a credit card with restaurant discounts or dining cashback so you can save on your meal. The American Express Platinum Card is perfect for this, as it lets you save up to 50% off at over 30 restaurants in Singapore.
Remember that extreme thrift is just as bad. Spending hours cutting out coupons is a waste of time, you should be dedicating the hours to finding a side-income.
4. They Affect Your Investment Decisions (If They Talk About It)
Despite advice to the contrary, most people still base investment decisions on what their friends are doing. This is how pyramid schemes, multi-level marketing, and gold trading scams all get a wide read: after they hook one gullible person, they count on that person bringing friends into the same scheme.
Even with more conventional (read: sane) investments, you can be greatly influenced by a friend’s choice of stocks, bonds, mutual funds, etc. If you consider your friend to be more financially savvy, there is a good chance you will “follow the leader” and imitate their portfolio. This is seldom a good idea, as everyone needs to have an individual financial plan. What works for your friend may not work for you.
Sometimes, saving money is just a matter of hanging out around the right people. If you are in a tight financial spot, you may want to limit your exposure to the richer, more spendthrift types for now.
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