Along my financial journey in life, I made a great number of mistakes. In this ten part series which runs from July 19 to July 30, I’m going to focus on ten of my worst mistakes and the difficulties and successes I’ve had in overcoming those mistakes.
I surrounded myself with friends who constantly encouraged poor financial choices.
Most of my social circle during my early professional years consisted of people who placed a great deal of social worth on consumption. Respect and friendship were doled out based on the elecronics you owned, the clothes you wore, the golf clubs you had, the places you ate at, and so on.
If you showed up to a social event with a new cell phone or a new driver, the gang would gather around you with high-fives and looks of awe and respect and envy for the items you had.
On the flip side, if you had an old cell phone or didn’t wear great clothes or used old golf clubs or hadn’t eaten at the best restaurants, you were gradually excluded from the conversation and, eventually, excluded from the social events as well.
I made a valiant effort for a few years to run with this crowd. I dressed wonderfully. Sarah and I ate at tons of nice restaurants. I had the latest gadgets, including piles of video games. I went out with the gang a few nights a week. The list went on and on.
It was just a giant game of oneupsmanship. Rather than building real relationships based on the realities of our lives, everyone just talked about stuff – and who had the best stuff. Why talk about long term goals when you could brag about your new golf club? Why discuss how to get ahead at work when we could trash talk someone for wearing slightly worn clothing?
In order to stick with this crowd, though, a person had to spend – and keep spending. Every single person in that group was living beyond their personal means. I suspect that some of them had parental help, but I’d be willing to bet all of us had some level of credit card debt.
What happened to this social circle when I finally got some sense about personal finance and realized I was driving my future into the ground? Almost universally, I was dropped from the group. They laughed at the idea of making a meal at home when you could be dropping $100 for a plate at a steakhouse. They stared at my beat-up cell phone. Soon, they stopped calling and inviting me to do anything with them.
Yeah, it hurt. What I realized from the experience, though, is that these people weren’t my friends. They cared about stuff, not about me. They only wanted people around them to reinforce the over-the-top spending decisions they were making.
Think about it this way. It’s a lot easier to spend $3,000 on a handbag if you have a circle of friends that talk reverently about said handbag and will ooh and ahh over it if you buy it, compared to, say, a circle of friends that wonders why on earth you would spend $3,000 on a handbag.
My current circle of friends is much, much different. We get together for regular potluck dinners. We play board games around the kitchen table. We have conversations about life goals and about ways we can maximize our bucks and our time. We share clipped coupons with each other. We laugh together and goof off together.
In short, it’s an environment that supports a healthy flavor of personal finance management. We don’t socially reward over-the-top consumption. Instead, we socially reward insightful discussion, good humor, and good life choices.
Having such a circle makes it so much easier to be in financial control. There is no social expectation of spending. Instead, there is a social expectation of rational use of money and time, of investing for the future and thinking about the future, of exploring the handful of hobbies that are actually important to each of us.
My biggest mistake was not investing the time to find a social circle that matched these values to begin with. Instead, I simply started hanging out with the first people that I had even the smallest interest overlap with and I wound up adopting that group’s values for a while rather than seeking out others that may have matched my own.
How can you avoid this trap?
First, don’t believe you have to change who you are or what you value just to match what your social circle wants. If you’re buying things or doing things that mostly only serve to impress your social circle, it’s a great sign that you’re perhaps not in the right circle of people.
Second, seek new friendships in the right way. Let your own true values and interests lead you to these people. Engage in groups that match the things you want to do – don’t engage in activities just because that’s where you think people are. The bar/club scene come to mind – I’ve met so many people who basically can’t stand going there, but they continue to do so simply out of a desire for social interaction. Broaden your horizons and start seeking people based on what you value, not based on what you think they value.
Finally, don’t hide who you are. This doesn’t mean you have to hang out all of your dirty laundry, but it does mean that you shouldn’t have to hide some significant aspect of what you value or who you are. If you’re in a group that won’t like you because of some aspect of who you are, it’s time to find a different group. If you’re in a group that won’t respect you because you’re goal oriented or in charge of your finances, then it’s time to find new friends.