Nearly 40% of Millennials have gone into debt to keep up with their peers.
And after spending money they don't have, the buyer's remorse is real. Two-thirds of Millennials regret spending more on social situations than they had initially planned.
So why say yes when your wallet is telling you no?
Gen Y says the fear of being excluded from future activities, feeling like an outsider, losing friends and being judged are key reasons why they feel pressured to overspend.
While all valid concerns, you don't have to go broke just to maintain your friendships.
Here's what to do instead.
1) Explain your situation
73% of Millennials who have gone into debt for social reasons kept it a secret from their friends.
Talking about money is taboo, but it shouldn't be. Looking at the numbers, many of your friends probably feel the same exact way you do—pressured into spending money that they don't have just to be social. But you'll never know if you don't talk about it.
And even if your friends make more money than you and can afford their lifestyle, chances are they don't want the people they care about to go into debt because of them.
Having a candid conversation about money with your friends is a great way to avoid the fear of missing out, aka FOMO, as well as unnecessary debt. On top of that, discussing an intimate topic like money can be a great way to bond and build a stronger friendship.
2) Suggest an alternative plan
Just because something costs less doesn't mean it's not as fun. Most of the time when people plan to hang out, they pick the first thing that comes to mind out of habit. That means it's the easiest plan, not the best plan. With a little effort, you can usually find an option that's not only more affordable, but more fun too.
A client of mine was regularly getting drinks with his coworkers at a bar next to their office despite it being crowded and overpriced. After doing some research, he found a tapas bar with a 2-for-1 happy hour special and a great vibe that was just a few blocks away. His friends from work were happy to check out a new place and were even more grateful when the bar tab came.
Most people like to switch things up and everyone likes to save money. Becoming the resident planner in your friend group requires time and effort, but it also puts you in control of the budget.
3) Prioritize goals over expensive social outings
If you don't want to admit you're broke or your friends are creatures of habit, all hope is not lost.
If this is the case, just go for the goals. Most people get that goals = money and that you might need to sacrifice your social life for a little to get what you want.
Next time someone asks you to do something expensive that you don't think is worth the cash, just mention your goal. Say you'd love to attend, but you can't right now because you're saving for something that's really important to you. Your big goal can be anything from getting in shape to starting a business to a trip to Europe next summer.
For example, I had a client who was going to expensive group dinners multiple times each month with her girlfriends. She was annoyed because while she wanted to see her friends, she was "getting fat and broke" in the process.
So, she decided to run a 5K. She told her friends about her goal and that it meant she wouldn't be able to attend dinner for a while because she'd be training daily and on a strict diet.
Not only were they understanding, but they were really impressed. They even showed up at her first race to cheer her on. And she saved more than $1,000 by skipping group dinners while she was training.
You become who you hang out with
You're the average of the five people you spend the most time with, and that applies to net worth too.
If your friends are focused on becoming financially successful, you'll probably achieve financial success as well. If your crew is racking up credit card debt at the bar every weekend, you'll likely wind up in the same boat.
Choose the people you spend your time with wisely. A friend who was really fun to party with in college may not be the best person to surround yourself with if you want to build an amazing life as an adult.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917