Your Friends Really Do Influence Your Spending Habits

Wimbledon Center Court Roger Federer
Watching Roger Federer on Center Court at Wimbledon 2014. Bucket list item.

I met up with a friend of mine the other day for a function. He rolled up in a new Lexus IS350 that costs about $43,000 out the door. Immediately, I was envious of his wheels given I just drive a $20,000 Honda Fit named Rhino. My thoughts of doing the economical thing of buying out the residual value after the three year lease expires went out the window. I began fantasizing about what sports car to buy in 2017.

No, no, no! I told myself several minutes later. Sure, I'd love to drive a fancy car, but I reminded myself that I hate the stress of worrying about damaging expensive things. I enjoy parking in a crowded parking lot and not caring about a door ding. I'd much rather own stuff I can just throw away without any after thought.

Back in 2005-2008 I was extremely into collecting fancy watches. One friend had a FOMOYOLO mentality and bought a couple $8,000 IWC watches, just because he liked their style. So of course I started collecting watches because I thought, why not me too? I've got just as much money as him and I work harder. The funny thing is, before hanging out with my friend, the most expensive watch I'd ever purchased was a $500 Seiko. Now here I was spending $12,000 on a Rolex Stainless Steel Daytona. It was nuts!


I went to Wimbledon this summer to celebrate my good friend's 50th birthday. He and his family were staying in a $2,500 a night suite at The Berkeley Hotel at Hyde Park. Meanwhile, junior rooms cost $650 a night. I would have none of that.

Instead of staying with my friends, I decided to take up an offer from one of my advertising partners and stay at their corporate apartment in East London off Brick Lane for free, baby! The one bedroom corporate apartment wasn't very fancy, but it had a kitchen, a bathroom, two beds, a balcony, and wifi. What more does one need? I didn't go all the way to London to just chill out in a room. Taking the tube 25 minutes to meet up wasn't a big deal.

Despite not flying first class or staying in the same five-star hotel as my mates, I was still able to enjoy the same birthday party as the other 80 guests, play at Queen's Club with Mats Wilander, and go watch Rafael Nadal and Roger Federer battle on Center Court at Wimbledon before they retire. Wimbledon really was a dream come true.

There's probably an 80% overlap in lifestyles between the middle class and the wealthy. It's only a marginal 20% of life where the really rich get to experience more than the rest of us ever will.

For example, some of the people at the party have NetJets accounts at $100,000 a pop that gets used up at a rate of $6,000 – $10,000 an hour, depending on the plane size. One fella lives in a 15,000 square foot mansion in Pacific Heights. But beyond living large and flying private, everything else is pretty accessible to most middle class and mass affluent people. It might be tougher sending your kids to private school for $40,000 – $60,000 a year, but it's still doable with financial aid, grants, and scholarships.

Brick Lane, London by Nordic London Flickr Creative CommonsAlthough my residence wasn't anything fancy, I just remember coming home happily exhausted every day from all the activities. After taking a nap, we'd walk around the corner on Brick Lane to eat the most wonderful chicken shashlik bhuna at a Bangladeshi restaurant for 25 pounds. Heaven I tell yah. Although it was costly to fly to London and spend a small fortune for Wimbledon tickets to be with my friends, it was worth it.


Your true friends won't make you feel bad about your lack of wealth or your abundant amounts of wealth. They'll just be happy to have you around to hang out. I'm happy to subsidize the shabu shabu team dinner bill for this one tennis ace who went 3-0 for us in Districts. He's finishing up college and lives in a two bedroom apartment with his mother and two brothers.

On the other end of the spectrum, if your very wealthy friends want to take care of you, then you might as well thank them graciously and let them hook you up. They just want you to feel comfortable and enjoy your company. You can make it up to them in many non-monetary ways. I'm sure hitting with Mats Wilander cost the birthday boy at least $8,000 for the eight of us for two hours. We all just hugged and took pictures afterward and smiled.

It's human nature to want what your friends have. Just realize that your spendy friends may very well have much more money than you know due to hidden income, an inheritance, or family assistance. Don't fall into the trap of keeping up with your friends if your income cannot follow along.

The comedian, Kevin Hart said it best in one of his skits, Stay In Your Financial Lane. Take a look at the video below where he describes why he can't hang out with pro athletes because they ball too hard. Be forewarned, the video is laced with swear words if you are easily offended.

Sports Illustrated reported that 78 percent of NFL players face bankruptcy or serious financial stress within just two years of leaving the game and 60 percent of NBA players face the same dire results in five years. I find these stats very hard to believe, but surely there is some truth to these scary figures.

Don't let your friend influence you to spend way beyond your means!

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48 thoughts on “Your Friends Really Do Influence Your Spending Habits”

  1. Gary Mattoc

    This is one of the biggest challenges in our finances. There’s really a choice you need to make when it comes to this either you step back at least for a while or get them on board. But if these things fail at least make them understand your situation, they are your friends after all, right?

  2. My friend is refinancing his house and taking about 40k cash to put a pool in. While i’d love to have a pool in my backyard, I’d rather save up for one. He just loves to spend his money.
    He always asks if I’m going to take any equity out of my house (have about 130k). no chance!

  3. Stefanie @ The Broke and Beautiful Life

    Luckily, my friends don’t have expensive taste- but even they have a tendency to stretch their spending beyond their means, and more so in group environments.

    The other night I walked by a huge line in midtown which I later found out was to buy the latest pair of some kind of sneaker (maybe Jordans?) People were camped out overnight to pay way too much money for a shoe!

  4. grandmoffhozz

    “…it’s still doable with financial aid, grants, and scholarships.” Glad to see that in here, Sam. :)

  5. Sam-

    I have some super wealthy friends. You just accept they have access to different opportunities than you do. It’s always nice to be invited to things though!

    I am not sure if I agree with your comment about an 80% overlap between the middle class and wealthy lifestyles. I feel like there is a HUGE difference between lifestyle opportunities among the middle class and the wealthy (at least the way I define it). The difference between being retired with 1M net worth or 4M net worth can be enormous in terms of lifestyle. The difference between 4M and 7M won’t be as big in terms of lifestyle differences but 1M and 4M can be gigantic.

    In terms of income, middle class (40k-80k) and wealthy (250k+) can have enormous implications on lifestyle. Thoughts?

      1. I’m pretty sure you’re well above middle class. With your income and no dependents, you have a lot more discretionary income than everyone but the top 1%. It is true that if you want to stay home and watch TV and surf the internet, everyone in the middle class can afford that. Not sure about much more than that.

  6. FS, that sounds like an awesome adventure done with some networking style, and very nice of you to subsidize your teammate. Someone much smarter than me said that people become (and stay) friends with those who earn within 25% of what they earn. This makes sense, especially in younger years, when you meet people who live in your neighborhood, go to your school, and work at your level at your first jobs. FS, very few people would be able to hang with that 50th birthday party, and that was the point of the party. Friendship is a very tenuous thing, most friendships should never be tested.

    I have seen the ‘money thing’ be used as a weapon, a proxy for ‘respect’, ‘power’ ‘presumed ethical behavior’, in both directions. As soon as that happens, it is a sign of imbalance in the friendship, probably permanent and usually very mean. One person making clear to the other that they are not in the same “financial lane.” Stories like the watches and wine (loved nbsdmp’s story!) are really not about timekeeping or social imbibing.

    And I love Kevin Hart and appreciate his on-stage persona keeping it real, he clears over $10 million a year with his live shows alone and is a very serious corporation with a 5 year-plan.

    1. It was a great experience I will never forget. One day, I’ll post some fun pictures. The one thing I always want to do is never forget my roots. Perhaps there’s a great trip to Wimbledon one year, but I’ll never not hang out with my tennis teammates who might still be trying to ramp up their careers. I’ll play tennis at a posh private club, or a public park. It doesn’t matter.

      Kevin bringing in $10 mil is huge!

  7. These social forces are such an immensely powerful thing! Even when you think you have very firm rules and beliefs about your money, you can still be swayed. I think a high level of self confidence and self esteem would go a long way to being able to stick to your own money values in these sort of social situations with ‘high-flying’ friends.

    But it sounds like the best approach is the same thing that applies to not eating cookies – just keep them away from your house because once they’re nearby, it’s just too hard to resist!

    1. One of the most self-confident testers is a heterosexual man rolling into a social function in a car like a Honda Fit. It will test your self-image and self-confidence for sure.

      It’s easy rolling up in a fancy car!

  8. Like Mrs. Frugalwoods, our close friends are pretty frugal like ourselves. Good friends of ours are doctors yet they continue living like they’re poor college students. We do know a few people that spend like there’s no tomorrow but we really don’t envy them or want to keep up with them. I recently drove in a family friend’s fully loaded Lexus LS. Yeah the car was nice but I didn’t find the driving experience to be significantly different than my Honda Civic. Although I might be able to go out and get a Lexus LS, I really had no desire to do so.

    Friends do have some influence on your spending habits but ultimately you’re the one that decides how you want to spend your money.

  9. The Alchemist

    I’m an outdoors athlete— runner, hiker, cyclist, rock climber, etc. It often pleases me, as I gaze over some gorgeous vista in Yosemite or Tahoe, or locally here in the Bay Area, to know that these places are no more beautiful for those with tons of $$$ than they are for me. In some cases, all their money cannot buy them access to where I can go, because the price of admission is kickass fitness rather than a kickass bank account.

    Stuff is just stuff. Sam is absolutely right— real friends don’t care about your stuff, they’ll care about YOU. Sure, it’s great to be able to have stuff too, but the happiest folks are those who really understand that people are what really matter. A pat little platitude? Perhaps. But imagine being filthy rich… with nothing but fawning, sycophantic hangers-on hovering about you. “Do they love me for me,” you may ask yourself, “or for my money?” You may never know.

    More power to anyone who’s made it and can afford the finer things. But make sure you take care of the people in your life as priority number one.

    1. LOVE THIS ——–> “price of admission is kickass fitness rather than a kickass bank account.”!

      One of the beauties of Hawaii is that ALL beaches are free, even the beaches in front of $20 million mansions. Ohana!

  10. I agree with JNEW’s comments above. Maybe I’m overly cynical but I do not assume that friends “have much more money than you know due to hidden income, an inheritance, or family assistance.” I assume they spend every penny — or, worse, more pennies — than they make. Consumer credit is so readily-available that almost nothing — cars, clothes, homes, etc — signifies wealth.

    1. It’s only logical though Ted. If they are spending a ton more than you, they probably have more wealth than you, by whatever means. Consumer debt can’t explain everything.

      You’ll be surprised at how large some people’s balance sheets are once you take a peak. Talk to financial advisors, or bank tellers.

    2. Ted, my husband and I see it the same as you. We know some of our friends income and they tell us everything they buy too. It’s crazy how in debt they are. We assume the same, they must spend every penny they earn.

      Sam, we have spoken with our financial adviser about this. He agrees that the majority spend everything that they make. The wealthy is a small minority.

  11. No. My friends really do not influence my spending habits. Because I’ve always been very deliberate and conscious about my spending habits. My friends are not paying for my child’s college education or our retirement.

  12. Sam:

    I go through the same exact dance when it comes to cars. In fact, I just sold my Audi….what a relief! I no longer obsess over parking, etc. I’m quite sure now that I like the idea of a fancy car much more than the actuality of one.

    1. Feels good not worry about losing or damaging an expensive item doesn’t it?

      The feeling of free from worry is one of the main reasons why I keep things more simple and minimal nowadays. Well, I’ve been going on this more minimal, low inventory path for at least 5 years now.

  13. The other day we all sat down for lunch at work and everyone had taken out their Coach/whatever brand handbags and iPhone 6 plus and there was mine iPhone 4 and not even an S. I felt poor – but I had to tell myself that it is ok, I am saving more than these people. But I do get judged, but I am hoping my personality always take over to woo my friends – sigh!

  14. I’m a lot more comfortable with friends at my level of finance. All my friends in college were poor. Actually, I should have learn how to hang out with rich people with influences. Oh well, I guess it’s too late. I’m happy with my friends and our level of spending.

  15. I like the comment about how true friends try to make money an afterthought. I went to undergrad at a beautiful but expensive college that attracted a lot of wealthy kids. I really wanted to do all the glamorous things they could do, but it became clear early on that it wasn’t remotely possible. They were not yet sensitive to the fact that not everyone has luxury cars and allowances in college! My adult friends with more disposable income are much more understanding – maybe they pay when we go out to a fancy restaurant but I try to have them over for dinner at my house in return.

    1. Ah, when you’re a rich kid attending a rich school, there is NO CONCEPT of money. It’s only when the rich kid has to stand on their own two feet and find a J.O.B that things get real, real quick.

  16. Everyone has different luxuries that they wish to spend money on. I would never consider spending money on watches (as FS and another on this board would). But I do not mind spending money eating out – more than I probably should. We all have our weaknesses.

    1. I just Googled a conversion table. 25 pounds is just over $45 Canadian so chicken dinner for 2 with an alcoholic beverage is reasonable. Good thing I don’t travel. I would never have any idea if something was a good deal or not.

      1. Chicken SHASHLIK BHUNA is seriously one of the best dishes EVER. I’ve never had it until the summer of 2014. It is a top 5 dish. You must try!

        $45 Canadian for dinner for two is relatively cheap in London. London prices are outrageous.

  17. Hi Sam

    I agree. I agree.

    So many people are social climbers– jealous at what others have and spending to keep up.
    They fool themselves that “they deserve” these things too.

    As if we all have a constitutional right to have the same amount of material possessions as our peers.

    The problem is we don’t.

    As you have opined, there is a lot of stealth wealth out there. But there is also a lot of voodoo wealth too. I define voodoo wealth as wealth that people pretend to have.

    What most people do not understand is that wealth is not measured by the car you drive or how many homes you acquire. There is this assumption that if you drive a bentley you must be rich.

    Wealth– to me anyway, is simple. It is defined by your net worth.

    I have a friend that earns $350k per year. Drives a Jag. has a great home. Two beach houses. Sends both kids to private middle and high school at $40/ yr each. Keeps a corvette in the driveway for the weekends etc… etc…

    Everyone thinks he has the life.

    The truth is that he has a negative net worth. He spends every dime he makes and then some.

    None of those things i mentioned are owned. Huge mortgages on all the homes, leased cars, financing for the private schools.

    He brags that he has a million dollars in debt !

    He spends his entire take home on loan payments and saves pretty much nothing.

    And everyone envy’s his lifestyle.

  18. Could not agree more with this post Sam! Too funny I went through the same watch phase…it starts with a respectable Omega Dive watch, the next thing you know you are sporting a JLC that costs twice as much as my parents first house they bought! All that craziness behind me, I absolutely have to say that a life well lived is not really that expensive at all. I like that my friends are all responsible professionals that do well but are not what would be considered rich or well off. Our vacations/activities are cheap by most standards, the fun is exponential, and I believe the memories created are better, because there are not preconceived notions that it better be so amazing because we are dropping $2,000 night to stay there or $500 bottles of wine that are supposed to be 10x better.

    (funny side story…I recently went on a couple dates and the girl told me on the first date about her favorite wine and the only wine she would serve to friends if they came over or to bring to a dinner party. On a subsequent date that we were supposed to be going to meet at her friends house she asked be to pick up a bottle, because of my travel I was not able to and told her she would have to…she proceeded to tell me she doesn’t have $300 to spend on a bottle of wine, and was huffy I suggested she purchase it. LOL, but when spending other people’s money “its the only bottle I’d serve”…needless to say she was promptly dumped)

    1. Hilarious story. So weird why she wasn’t willing to spend $300 on a bottle of wine she only serves her friends. Does she therefore never serve wine to friends and just bullshitting you?

      Or is she trying to just make others pay for it and free ride?

      1. Oh she was not bullshitting…very attractive women have a way of manipulating men to do really dumb stuff. She just wasn’t able to Jedi Mind trick me though LOL

    1. Nice litmus test. Although man… sometimes Taco Bell (Taco Hell) really messes with the stomach. The cheese whiz stuff from a tube is particularly tasty.

      I’ll change the term to In N’ Out burger instead!

  19. One of my favorite days in the last month was a day of disc golf at the local park, with a few beers from the local convenience store. Final tab: $6. For 4-5 hours of pure sunshine filled joy. And no buyer’s remorse either!

    I agree with you, and btw, Kevin Hart = A++

    1. Gotta love that! Reminds me of the time when I took the subway to Dyker Beach Golf Course in Brooklyn. The place was a dump, but it was fun to wear tank tops, drink 40s, and hack it up with guys hitting up on you and yelling to hurry up!

  20. While nowhere near as extravangant as your examples; I’m constantly being hounded by friends into splashing out on fancy meals or drinks at a cocktail bar. It’s taken alot of effort to slowly try and convince a few of them that we can have just as good a time doing cheapr activities.

    The ironic part of it is though that I know several of these cash splashers are earning far less than me and piling up the debt. It’s as if they purposly want to waste money in order to put on a show for themselves and others about how successful they are.

    1. The thing is, I’m pretty sure all of us who are frugal wish would could spend more and live it up to. After all, if a spendy friend lives it up for 70 years and dies… I would say s/he has gotten the most out of their money than those who just save since work and dies.

  21. I think we’ve naturally gravitated towards friends who are similarly frugal, mostly because we’re not willing to spend a ton of money on entertainment. For us, having people over for dinner is a very enjoyable Friday night. Since we’re not big on going out, we tend to hang with folks who also prefer to socialize on the cheap.

    I think you’re right that our friends influence our perception of wealth. Many of our social metrics are calibrated through comparison and I think financial well-being is pretty common to analyze.

    P.S. Your London accommodations sound perfect! Nicely done!

    1. I wonder how much our spending habits automatically choose our friends? Probably very common. Hence, it might be best to have a very large spending ability so one can hang with very frugal friends AND spendy friends.

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