I came across the Credit Karma article about Millennials spend more because they are trying to keep up with their friends. I had to write a blog post about it. Credit Karma/Qualtrics study of 1,045 U.S. consumers.
Now, I will put in a caveat and say I’m not Millennial, based on defining a Millennial as someone between 18 and 34. If you consider me a Millennial I will take it as a compliment just like if you were going to card me for a drink, with a huge smile. I do have grey hair after-all.
Just recently I came across the Bankrate article confirming this again:
“According to a recent survey by Bankrate, millennials are more likely to feel pressured to overspend (64 percent) compared to older generations (40 percent).”
The article continues to explain that is the type of spending is called FOMO (the fear of missing out).
Even Charles Schwab this year completed a survey that confirmed that 48% millennials and 41% Z generation will spend more money that they can afford to participate in experiences with friends.
This article made me remember a recent experience at the mall.
When I was walking around the mall a couple weeks ago with my daughter looking for some clothes for her, I noticed several different groups of younger people hanging out with each other and having a great time. They were shopping together and had bags from all sorts of stores. I wondered: were they shopping because they needed or wanted or were they pushed to get those items because of their friends? Did they save up for that shopping spree? Or was it something they HAD to put on a credit card and likely weren’t going to pay it off this month? I don’t know.
Don’t let your friends go into debt because of your wants. This means eating out, parties or even a wedding. Friends may pressure for those experiences but it can cost you a lot.
From the survey in Credit Karma article a Credit Karma/Qualtrics study of 1,045 U.S. consumers:
“73% of those who went into debt to keep up with their friends typically keep it a secret from their friends.”
So here are my suggestions:When out with your friends and this is a tough one you need to be honest about your money situation. They probably won’t want you to intentionally do something to hurt your future, but they don’t know what is going in your personal financial life, and you don’t know what is going on in theirs. Nobody can read minds.
- For those that want to go out and do something with friends be open and honest about the cost and ask them if it fits into their budget. This gives the friend the option to back out if they can’t afford it. It helps you know that you need to look for cheaper alternatives.
- For those that are tight on money, be honest with your friends and say something like: “This doesn’t fit into my budget. Can we do _fill in the blank_ instead?” It isn’t worth it to go into debt because of a friend’s activity.
Using these strategies will help you open up with your friends about finances. It doesn’t mean you can’t ever do that activity just look at saving up for it as a priority.
Just like marriages, friends should be open about things. Nobody wants to be pressured to spend money that they aren’t comfortable spending, and it isn’t fair to put a friend into debt just because they feel like they will be left out if they don’t participate.
FOMO (fear of missing out) is real.
Have you gone into debt to keep up with your friends? Do you have other suggestions on how to communicate with friends? Please write a comment. I would love to hear from you.
Updated article from December 2018.