How to Keep Social Spending From Derailing Your Financial Goals

Friends can bring out the best in us. But sometimes they can also bring out the worst. Especially when it comes to overspending on social occasions.

When we’re out with our friends, we often want them to think of us as successful, so we might agree to meet at an expensive restaurant, or even vacation together at a pricey resort. We want to appear so prosperous that money isn’t something we have to think about. So, we generously pick up the tab.

But later, we feel remorse as we’re paying off high interest credit card debt or putting our long-term saving goals on pause to get our finances back on track.

It’s called social spending. And while it affects people of all ages, it especially impacts those under 40. A recent survey by Ally Bank found that nearly 60% of Gen Z and millennials have had their financial goals affected by social spending. And members of these two cohorts also report that they regularly overspend on their social budgets.¹

CNBC spoke on this topic with “Emmy,” a 31-year-old living in Los Angeles, who found herself caught in a cycle of maxing out credit cards, paying them off, and then running up balances again. The cause was her habitual overspending when she went out with friends.

These relationships were important to Emmy and she eventually realized she didn’t have to stop getting together with these friends if they could find cheaper ways of hanging out. But the idea of bringing this up with them was daunting. What if they looked down on her for letting financial considerations affect her social life?

But things went better than expected. Not only did Emmy’s friends not judge her for her need to control spending, but they appreciated her honesty.

Real friends support your goals. And as Emmy demonstrated, if you communicate your need to control spending in terms of a positive outcome you’re trying to achieve (like paying off high interest debt), your true friends will feel positive about helping you.

Relationships are the most precious things we have in this life and so worthy of spending money on. Getting together with friends is important enough that you should make space for it on your calendar and in your budget.

Working toward your long-term financial goals doesn’t mean denying yourself the things that make life worth living along the way. It just means making them part of your plan.

As your trusted advisor we’re here to help you achieve lasting financial health. We’ll continue to refine your unique plan for success while holding you accountable to take each step required to achieve your goal.

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