You know that overspending friend who always wants to go out and spend money, even when they don’t have much? Yeah, we pretty much all have one (or a few) of those. And while it’s fun to have a night out on the town, it can become costly.
Overspending can be a difficult habit to break, but it’s essential to be mindful of it to keep your financial self-care in check. A 2018 survey revealed that 39% of millennials overspend to keep up with friends, and 36% doubt that they can continue their social life for another year without going into debt.
It’s hard to socialize and have fun when you’re always picking up the tab or spending more than you want on a night out. But with proper money boundaries, you can enjoy your time with friends and avoid breaking the bank.
What is financial self-care?
Financial self-care is the practice of looking after your financial wellness in the same way that you would your physical health. It includes setting—and sticking to—a budget, paying off debt, and saving for financial goals.
A 2019 survey revealed that 36% of Americans struggle to sleep due to money problems. And another study showed that money is the number one cause of stress across all age groups. Practicing financial self-care is important as it helps to reduce stress and anxiety related to money.
Doing what you can to reduce money worry is a step in the right direction towards financial well-being.
Why should you set money boundaries with overspending friends?
Money boundaries are essential for maintaining healthy relationships with friends, family, and significant others. Without clear boundaries, it’s easy to get caught up in spending sprees, and you may even lend money that will never get repaid.
Setting money boundaries doesn’t mean you have to be a party pooper. There are several ways to have fun and keep up a social life without spending a lot. For example, instead of cocktails at the bar, you could bring a bottle of wine to a park. Or instead of eating at a restaurant, host a potluck dinner party where each friend contributes.
Yes, it can be difficult to say no to friends who want to go out and spend without a care. You might feel like you’re missing out or being left behind, but it’s vital to remember that you are in control of your finances—not them.
If you don’t set boundaries, you could spend more than you can afford or find yourself falling into debt; and that’s not a financial position you want to be in. Proper money boundaries will help you manage expectations, avoid financial stress, and foster a positive money relationship.
Here are a few reasons why setting money boundaries is important:
- It will help you get closer to your financial goals
- You’ll be better positioned to attend to your needs first
- It will help you stick to your budget
- It will help reduce the likelihood of feeling overwhelmed by financial obligations
So you know why you should set boundaries but don’t know how…
Here are 14 ways to deal with overspending friends
1. Be honest with yourself:
If you’re struggling to make ends meet, then it’s not realistic to expect that you can keep up with friends who spend without thought. It’s okay to admit that you can’t afford it—to yourself and them.
2. Have a conversation:
Once you’ve assessed your financial situation, it’s time to have a conversation with your overspending friends. Yes, this conversation can be difficult, but it’s important to be honest about your financial situation and what you can—and can’t—afford. Choose a time when you’re both relaxed and not in the middle of a financial transaction. Then explain that you’re trying to be more mindful of your spending and ask if they would be willing to do the same.
If they’re not, it might be time to find new friends who share your financial goals.
3. Set your money intentions:
If you’re serious about getting your finances in order, it’s time to set your limits. Track your income and expenses for a month to understand better where your money is going. Then figure out if you have leftover money for extra fun after your necessary expenses are taken out.
4. Find cheaper ways to have fun:
Get creative and think outside the box to come up with different activities that won’t break the bank. Think hikes, movie nights in, board games, or free membership days at parks and zoos. There are almost always low-cost or free events happening in various cities. Do a quick search and find what’s happening in your area.
5. Don’t loan money:
If a friend asks to borrow money, and you’re not financially able to lend money with the risk you may not get it back, it’s best to say no. It’s not worth putting yourself in a tight spot—or damaging your relationship with a friend—over a loan that may not get repaid.
6. Limit yourself to using only cash at hand:
When you use cash, you’re more mindful of your spending. That’s because it’s harder to part with hard-earned cash than it is to swipe a credit or debit card. Next time you’re out with friends, only bring the cash you’re comfortable spending.
If you don’t have cash on hand, tell your friends that you’re happy to do something else instead. This discipline will help you stick to your budget and avoid impulse purchases.
7. Offer to pay separately:
If you’re out having fun and the bill comes, offer to pay separately. This way, you can still participate without overspending or putting yourself in financial jeopardy. If your friends insist on splitting the bill, then be honest about how much you can afford to spend.
8 Avoid FOMO:
The fear of missing out (FOMO) is a real phenomenon. With social media, it’s easy to compare your life to others and feel like you’re not doing enough—or that you don’t have enough.
Just because someone is spending money doesn’t mean they should. And just because you can’t afford to spend extra money doesn’t mean you’re not doing well financially. Avoid FOMO by being mindful of your spending and staying true to your longer term financial goals.
9. Avoid the financial temptation:
There will be instances when avoiding financial temptation proves difficult. But there are other times when you can easily remove yourself from the situation. If you know that your friends are going to a fancy restaurant outside of your budget, don’t go.
It’s okay to decline politely and do something else instead. You can also unsubscribe from emails and social media accounts that promote spending.
10. Talk about money more often:
Money is a sensitive subject for many people. But it doesn’t have to be. Talk openly about your financial goals and concerns with your friends. Discussing your goals can help them understand where you’re coming from and why you’re trying to be more frugal. Maybe you even get them on board and they want to start saving more, too.
11. Seek professional help:
If you’re having trouble getting your finances in order, there’s no shame in reaching out for help. A financial planner can assist you in creating and setting financial goals. They can also offer guidance on investing your money and saving for the future.
Those in debt should consider working with a credit counselor or financial advisor. They can help develop a plan to pay off your debt and improve your financial health.
12. Keep the big picture in mind:
When you’re trying to be mindful of your spending, it’s essential to keep the big picture in mind. What financial goals are you trying to achieve? Why did you decide to set money boundaries in the first place?
Your financial goals are more important than temporary gratification. So, if you have to say no to a friend or two to stay on track, that’s okay. Your future self will thank you.
13. Remember that other opportunities will come up:
There will be more opportunities to socialize with your friends—and other opportunities to spend money. If you can’t do something because it’s outside of your financial boundaries, don’t worry. There will be another opportunity.
Focus on staying true to your financial goals and be patient. The fun will continue—without the financial stress.
14. Find new friends:
If your current group of friends constantly pressures you to spend money without regard to your boundaries, it may be time to branch out. Finding new friends may seem like an extreme solution, but it could be a necessary one.
There are plenty of people out there who are on the same financial journey as you. Find a group of like-minded individuals and build relationships with them. Not only will they be more understanding of your financial situation, but they may also provide helpful advice and support.
Making big financial changes is almost never easy. But it’s important to remember that you’re not alone. So many people have been in your shoes and have come out successful on the other side. With a little time and some healthy boundary setting, you can learn to deal with friends who overspend without sacrificing your financial self-care.