Published in: Banks | Aug. 5, 2019

How to Stick to a Budget When Your Friends Are Big Spenders

By:  Lyle Daly

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If there are big spenders in your social circle, it’s tough to maintain financial discipline.

Group of women holding shopping bags and a credit card

Image source: Getty Images

You’ve set a budget and you’re working hard to save money. There’s just one problem -- your friends keep putting you in situations where you feel pressured to overspend.

This is common when your friends don’t share your good financial habits or when there’s a salary discrepancy at play, and it can be hard to know what to do. You want to hang out with them, but you don’t want to get stuck splitting a large check at dinner or going to expensive bars every weekend.

By taking a few simple steps, you can stick to smart spending habits and avoid awkward moments with your friends.

Figure out your discretionary income

The first thing you need to do is calculate exactly how much discretionary income you have. Here’s how:

  • Start with your monthly income.
  • Subtract your savings and your regular monthly expenses.
  • The remainder is your discretionary income.

Let’s say that your take-home pay is $2,500 per month. Your savings goal is 30%, which is $750, and you have $1,250 in regular expenses. That leaves $500 in discretionary income.

This discretionary income is your fun money, and when you know how much you have to play with, it simplifies your spending decisions. There’s no need to guess at whether you can afford an activity. You can just consult your bank accounts to see how much discretionary income you have left for the month.

Research affordable activities in your area

If your problem is that you and your friends always seem to do something expensive when you spend time together, then an easy solution is to find more affordable things to do. Here are some potential low-cost options:

  • Go hiking
  • Dine at a restaurant or bar with happy hour deals
  • Visit a museum or art gallery
  • See a movie at a budget movie theater

With a little searching, you’re bound to find plenty of nearby activities that won’t break the bank. Then you can suggest one of those the next time you set up a meeting with your friends, or you can propose an alternative if they suggest something that’s too expensive for you.

Know how to say no

It’s natural to feel pressured to say yes to your friends, especially when it’s something the whole group wants to do. But if you spend too much because of peer pressure, it’s going to affect your financial situation, and you could end up feeling bad that you wasted money on something that wasn’t even your idea in the first place.

If you’re the type who has trouble turning down these invitations, then it’s a good idea to figure out what you’ll say ahead of time. This could be as simple as telling people upfront that you can’t afford to go out or that it doesn’t work with your budget right now. You can also suggest doing one of those less expensive activities that you found instead of what they’re suggesting.

Don’t be afraid to ask for a separate check

Going out for a meal or drinks is a common social activity, and it can lead to a potentially tricky situation when your group needs to figure out how you’ll all pay the tab.

Plenty of financially-conscious diners have gotten the short end of the stick here because of a suggestion to just divide the bill evenly amongst everyone. Great for the people who had drinks and filet mignon, bad for those who had chicken and club soda.

Again, it’s good to know what you’ll say here so you don’t get stuck paying more than you bargained for. The direct approach tends to be the best way to go, and one easy option is to say that you’d prefer to just pay for what you had. 

Stay focused on your own financial goals

One of the challenges when you have friends who spend a lot of money is that their behavior can rub off on you, even if they aren’t intentionally pressuring you to keep up with them. When the people you’re closest to are always buying expensive new products, dining at fancy restaurants, or taking vacations, you’ll naturally want to do the same.

That’s why it’s so important to have your own financial goals and focus on those. Before you make any major spending decisions, think about how they will affect your goals and your future. It may be tempting to spend over $1,000 on a vacation when your friends invite you, but if you’re also trying to pay off your student loans as quickly as possible, then you have to decide which matters more.

It’s not easy to make smart spending choices when your best friends have no qualms about throwing money around. Fortunately, if you research less expensive alternative activities, communicate openly about what you can and can’t afford, and keep your own financial goals in mind, you can still stick to your budget.

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