Are Your Friends Smart With Money?
Posted by michelle on Jun 25, 2012 in Saving Money | 53 comments
Over the weekend, we met up with some good friends who happen to be really smart about money. I’ve known the fairer half of the couple since high school and she’s always been a smart cookie. She and her husband both have good jobs, working full-time and sometimes overtime hours. They live in a modest house, have newer but not luxury vehicles, and carry no debt. This summer, they are planning to go on 2 trips. Both excursions are because of an out-of-state event in which they will plan their vacation around. The only problem was that these trips did not fall within their budget. Instead of doing what most people would do and just putting the expenses on a credit card, my money-smart friends took on more overtime at work and my friend even picked up a side job to help make up the money. I know that right now this is a bit of a strain on her, as she’s also a mother of two, has a demanding job as she is the manager, a husband, and friends she’d like to see occasionally. However, this is what she has to do in order to pay for these trips without putting any of it on credit cards. She’s doing everything right and I’m really proud of her, even though this means that I get to see less of her.
Another couple we lovelovelove is looking for a new house. They have done everything the right way from day one. Right now, they are living in a modest house in a neighborhood where although they feel safe and comfortable, they aren’t impressed with the school district. Since they have a small child a few years away from kindergarten and another on the way (so exciting!!), they have now adjusted their priorities and will be looking for a small home within a better-rated school district. They have been saving all their pennies and want to move to a really nice area. They are well-aware of the sacrifices they will be making. A better school district usually means a more expensive area and more expensive housing of course. Therefore, they probably will not be able to afford a 5,000 square foot home with a pool, but in most areas, smart buyers should be able to find a home that meets their needs without issue. Since this couple is also handy (jealous!!) and hardworking, they have the option of purchasing a fixer upper and making a not-so-pretty home nice with a little bit of work. Since these are good friends of mine, I would like to be the first to step up and say I’m available to help with that move when the time comes!
Looking at these two couples in our lives has made me wonder what role family and friends play in our financial decisions. Does having shopaholic friends make you want to splurge? Do penny-pinching in-laws teach you anything about being frugal yourself? As I think about my closest friends, I notice a pattern. All of my friends are excellent budgeters and very smart with money! I don’t have any friends that are stupidly living above their means trying to keep up with the Joneses. I don’t have any friends who are pushy and rude to me when I hang my head and say that I can’t afford to go to a function or eat out at an expensive restaurant. They’re all level-headed, hardworking people. I wonder what role, if any, this has played in my own financial decision-making.
Unfortunately, if it is determined that having savvy friends is beneficial in one’s personal finance, it also means that having over-spending friends can be damaging to your wallet. So, stop shopping with those friends and definitely don’t get sucked into their high-spending ways. No problemo. The only time there’s a problemo is when the financially-misguided are your own family members. If you have family with shopaholitis, don’t disown them; teach them a better way! My sister and I talk on the phone daily, and one thing we love to talk about is money! My sister doesn’t have any spending issues, but we still like to help each other out whenever we have tips we’ve learned or money-making opportunities to share. We always tell one another when a paid survey comes up, share coupons on baby items as she has a little one as well, and offer each other advice and encouragement regarding larger purchases. If you are struggling with debt, I think it’s imperative to talk to your family and to be honest about your situation. If I weren’t “out” about our debt, my family might not understand when I decline an invitation. Having understanding friends and family has made our little journey to financial independence much easier on us.
Recently, my mother offered to purchase us a new outdoor grill since the one we’d been using for 7 years just quit working early this Summer. She knows both of our birthdays are coming up and she also knows that our baby will be turning 1 soon and that we had planned to grill the food for her upcoming party. It is so sweet and thoughtful of my mom to offer to purchase that for us, as we either would have gone without or gone further into debt to replace the broken grill. Yesterday, we went and picked out the new grill and I’m so excited to start grilling again. Family Finance just posted about the cost of outdoor cooking vs indoor and concluded that grilling outdoors is more expensive. Jeff and I are all about saving money these days, but we still grill, especially when having friends over. I think it’s all about moderation. Besides, there’s something very sweet about firing up the grill on a balmy Summer night, the husbands standing around with fresh, cold beers in hand, trading tips on how best to cook the meat, me and the other wives sitting around laughing at our men, and the children running through a sprinkler and chasing fireflies. I love Summer!
Hopefully, I’m right about friends helping us through our financial woes, because I do have some pretty amazing friends. If you’re one of them, thank you for your support and understanding while we’re going through this journey. We really appreciate it!
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We had some friends who opened a car dealership and started making TONS of money. The problem is they were spending it just as fast as they made it. They were real subtle but insistent on guilting us into vacations and other activities like eating out way too much. We slowly started hanging out with them less and less because it was definitely affecting us and our money decisions.
Good news they had a financial breakdown and are back on track but I would love to have some friends like yours they are an AWESOME example of the right way to become rich!
So good to hear you’re still friends with them! I hate to hear about friends losing touch because of things like this, but I know it happens so much.
I can think of a few friends who are really smart with money who are fellow graduate students. I think it’s vital that most of our local friends are grad students and so no one suggests really extravagant outings. However, I don’t know the financial situations of most of my friends, and probably the less-smart ones are quieter. Some of my friends are half-smart – really good at saving, but not doing anything with that money like investing or working toward a goal.
Emily @ evolvingPF recently posted..Searching for a New Home
True that I don’t fully know the financial situations of all my friends, but they all seem to be living within their means. Of course you’re right, though…the “dumb” friends might just be quieter!
Our friends are split… some are really responsible with money (our role models) and some are really living outside of their means. The ones living outside of their means don’t understand why we are making sacrifices to get out of debt. Making the change to live on a budget has strained that friendship. It is particularly frustrating to listen to friends complain about being in debt one day and then see them go out and buy a luxury car the next day. My husband and I are still navigating how to deal with all of this, but it is nice to have some friends who just get it. Thanks for sharing your story.
Felicity @ Waist & Wallet recently posted..Scaling Down: Week 6
Felicity..wow, that’s really tough. I would tread very lightly there for sure. Unless you are very close, I might not say anything at all. Just don’t get sucked into their ways and definitely don’t try to keep up with them. Slow and steady wins the race!
It’s so helpful to have friends that have the same views of spending money as you do. It’s tough being financially responsible and constantly having to turn down my friends when I get invited to golf outings or sporting events.
Over time I learned that I just stop getting invited because everybody assumes that I can’t afford it or will just say “no”.
While this hurts some of my friendships, it ultimately could be for the better. I’ve noticed that I’ve started to associate with more frugal couples and we do creative things (such as a monthly potluck dinner); so we can still hang out, enjoy each others company, and still be financially savvy.
Jason recently posted..What To Do When Selling a House – 7 Things To Get it Ready to Sell
If friends aren’t understanding when you can’t go out to eat or to an expensive event, they’re probably not true friends! <—sounds exactly like my mother…lol.
It stinks that you might have lost friends because of differing financial values. Hey, you know Jeff and I are pretty frugal! haha
I have friends who are good with money, but also some who aren’t as great with it. One of my friends has no money yet she goes out to eat every day (multiple times) and always guilts us into paying for things for her. Can’t stand it! We’re actually all trying to come up with a way to talk to her about it without her feeling ambushed.
Michelle recently posted..Spending, Life, Income and Food Updates…
Wow, I used to have a friend kind of like this. She eventually grew up, but not before we had all but stopped hanging out with her.
Since many of my friends have PhDs in economics… they tend to be relatively good with money.
Our post today is on family influences and money.
Nicoleandmaggie recently posted..Kids and money and class and ramblings about allowances
I would think your friends would be pretty money-smart! I’ll head over and check out your post.
I think that’s so true. For the most part my friends and family are very good with money, but whenever I do hang out with someone who likes to spend more, I do find myself getting sucked in and just going with it which can definitely be dangerous!
Mo’ Money Mo’ Houses recently posted..How to Make Any Space Chic on the Cheap
I do the same thing! Like I said, my close friends are all good with money, but whenever I’ve gone shopping with a spendaholic, I find myself going back to the store the next day to return a bunch of things I shouldn’t have ever bought in the first place!
Most of my friends are fairly good with money, to the extent that I know anyway. Hard to know if there is some credit card debt out there if you can’t really see it. I am a big beliver in the “average of 5″ though, as you eluded to above, having more friends that are financially responsible will actually help you be more so too. And I couldn’t give up outdoor grilling. Seattle has a fairly short window for “proper” outdoor cooking (I’ve done my fair share in the wind and rain) that I have to take advantage.
CultOfMoney recently posted..Paying off student loans
I love Seattle! It’s so beautiful. I tend to be one of those people that’s always cold, though, so I don’t think I could live there. Jeff has also grilled outside when the weather wasn’t so nice. He’s a nut.
Sometimes you just need a fresh burger, regardless of the snow falling. Plus, what’s a better treat than BBQ during the winter? It does take a bit longer when it’s icy though.
CultOfMoney recently posted..Sweet ass SEO for blog posts, be careful what you use
My best friend and I talk about money quite a bit as we are in the same boat financially. It helps to have someone to talk to.
Mackenzie recently posted..6 Month Check-In: Goals for 2012
Definitely. It helps to have someone to pull back the reigns when you’re thinking about shopping, too! That’s how my sister and I are for each other.
I guess I need to find some friends that are smarter with their money. Most of my friends over the last while weren’t great with their money either. So our bad money management probably fed each other. Now that I’m trying to turn the page on my finances, it would really help to have some supportive friends who are properly managing their money.
As for grilling, I didn’t read that particular post, but I don’t think it’s necessarily true all the time. If you run a air conditioner that uses much electricity, that is bound to offset the price when using an oven that is heating your home.
Modest Money recently posted..Why I Don’t Want A Smartphone
Jeremy, Jeff and I are good with money! We’ll be your friends!
You’re absolutely right about the air. He mentioned that in the post as he doesn’t even have central air!
Having financially smart friends is great. I think the people we are around the most do influence us whether we realize it or not. Outdoor grilling may be more expensive than cooking inside, but as a entertainment option it can save some money. I’d rather grill some burgers with friends and family on a Saturday night than go to an expensive restaurant.So a little money saved.
Totally true! We save loads of money by not eating at restaurants. Usually, if you host a bbq with friends, they’ll nicely return the favor, too.
I have some friends that are financially savvy, but not many of them. I have some that think they are because they have savings, but work part time and spend all of their money on clothes.
Daisy recently posted..Informal Learning Through Blogs
Spending all my money on clothes would be kind of fun. Being responsible really sucks sometimes.
I see how my friends spend money but I don;t really pay much attention to how much they make. Most of my friends are pretty frugal people though.
Sean @ One Smart Dollar recently posted..3 Best 0% Balance Transfer Credit Cards
It’s true, I don’t know exactly how much anyone makes (I don’t ask and probably wouldn’t ever!), but I know what they do for a living, which means I have a rough idea. I do have friends who are bigger spenders, but they’re also bigger earners. One couple we know owns their own business. As much as I like them, we just can’t hang out with them very often because we can’t keep up right now.
Many of my close friends are great with money. I just realized that the friends who are drifting away are not so smart with money. I hadn’t thought about it until now.
20′s Finances recently posted..The Cost of Moving
So sad, Corey
I guess it’s for the best, though.
Unfortunately, my friends are all terrible with money. So’s my family. It’s hard to do the right thing when there are so many negative influences out there, that’s why I’m glad I found the PF community!
Nell @ Housewife Empire recently posted..How to Succeed Online When You Feel Like Giving Up
Exactly, Nell! I’ll be your go-to girl if you need someone to talk to…(or yell at you!)
We have friends who are smart with money but the hard part for Dave & I is that they give themselves a higher allowance for entertainment than we give ourselves. When they ask if we want to go out to eat and it’s toward the end of the month we suggest darts and/or movie night instead! We do have a couple friends who WILL be doctors/lawyers BUT aren’t yet and are spending like they already are. Not sure what to think about that.
Jessica @ Budget For Health recently posted..Do you use your college degree?
That’s so hard, Jessica. I know, because we have friends like that as well. We’re not that close, though, and maybe this is why. Even if I had a lot of money, I just think it’s silly to spend a lot at a bar or expensive restaurants, especially all the time! Doesn’t it get old?
Really? Grilling more expensive? Come on….I’m SO glad you still grill. It’s great!
Trent at the Simple Dollar also mentions that you save money by not using the oven light. I’m with you: I’ll keep grilling and enjoying the outdoors during the summer. Maybe I’ll contemplate the $1 more it costs outside than if I were sweating in the house.
I have one friend who is interested in keeping up with the Joneses. We talk money and he constantly is talking about how he “had to have a car like…” or bought a Tivo because so-and-so….” Recently he asked how it seemed like we always seemed to have cash for important purchases. I just smiled.
AverageJoe recently posted..5 Summer Activities to Create Money Savvy Kids: High School
It’s so sad when people are so worried about what others have. I used to care about things like that, but then I realized that those that care don’t matter, and those that matter DON’T CARE! (Note: you can replace the last part of the sentence with “but then I graduated high school.”)
The oven light? For reals?? Hmm….
I have friends in both camps: some of them are really good with money and I learn a thing or a few from them. Sometimes I even ask them for advice Some friends are not that great. The funny thing is that those who are not that great with money, never listen to what we have to say. I always wondered why and I never can find an answer to this.
Some things you have to find out on your own, I guess. That’s how I am anyway. No matter how many times someone told me I was wrong or that there was a better way, I would still want to prove that I didn’t need anyone to help me! Maybe your friends are stubborn like me!
All my friends and family are terrible with money. They spend like there is no tomorrow. I am the odd ball of the bunch. They take vacations all the time, have new cars, and buy everything that’s not nailed down. I don’t spend because I don’t have the money to spend. I would hate to see their bills every month.
Dave recently posted..Airline Booking Secrets To Use On Your Next Trip
Slow and steady wins the race, Dave. I wonder….do your friends just make a ton of money or are theey borrowing from their futures?
I definitely think that family and friends impact your finances. My most spend thrift days were spent with other spend thrifts.
Thanks for the shout out!
JP @ My Family Finances recently posted..Are You My Audience Or Is Google and Top Ten Family Finance Articles #6
Mine as well, JP! I think there might be something to it. Of course I take full responsibility for overspending each time, but I know I probably wouldn’t have if I would have been hanging out with my frugal friends.
I have some money savvy friends. They provide valuable insight into how to do things right. It is also important to have somebody that you can “show the ropes to” as well. Data suggest your income is definitely associated with the company you keep. I would expect that your wealth would be as well. Cheers!
Roshawn @ Watson Inc recently posted..Stolen Life
Really, Roshawn? I didn’t know that about your income! Now you’ve got my wheels turning….
I want to be just like your friend who does everything and doesn’t have any debt, and avoids using credit cards! Does she have a blog?!
Maybe she should do a guest post! I would love to hear about her life too haha.
Being my age, a lot of my friends are not on the same page as me yet. A lot of them are not really established.. not thinking about the future such as buying a home, contributing to retirement, etc. No one is really starting a family yet or even getting married. I’m 24 so I guess I am just ahead of everyone else but I honestly can’t wait until my friends all get established so we can relate more.
I will ask her to write me a guest post! In fact, any of my friends can send me one.
Being your age, Erika….hmmm I don’t know. I had 2 kids when I was your age! I started my family at a REALLY young age! I didn’t start thinking about my financial future…or present!…until I was a little older, though.
It’s great that you have such money savvy friends, and you’re very fortunate. Often times, our finances are determined by the company that we keep, and that does include friends. As for me, I’ve had to walk away from a few of my friends over the years, mainly because of how they handled money. They were either careless with money, or they were always hitting me up for some.
Anthony Thompson recently posted..Work-at-Home Moms – Reasons They’re the World’s Greatest CEOs
Hitting you up for money?! Those aren’t good friends! So sorry you had to find out the hard way, Anthony.
Michelle, I am so disappointed you have not used your grill yet. It is a 22.5 inch Weber charcoal one touch grill with the side baskets, so that you can use indirect heat to grill the food. I also purchased the natural charcoal, which has NO chemical additives, and a chimney for you to start the fire.
Once you use it, you will definitely be eating better tasting food, for a lot cheaper than any restaurant would serve you. Plus you don’t have to worry about a 16 year old disgruntled cook’s assitant, and what he might have been doing to the food, right before it was served to you.
And the things you will be able to make. Meat, veggies, even pies and desserts are all things you can do on a Weber. Start the grilling. Sincerely, Your Mom
Mom, I am disappointed as well! We have been so busy that Jeff hasn’t had time to even play with it yet. Thanks again for the gift! I will light a fire under Jeff tonight to get it going. (Pun intended, naturally..)
I think as much as we would like to deny it our friends do play a role in our finances. The trick is that we need to stay focused so when people question our decisions we have a respectful response and move on.
Not going away to a 4 year university because I didn’t want to take out student loans was hard to explain to people and I received a lot of criticism. But I know that I made a mature decision and try to stay focused on staying debt free.
You are wise beyond your years! I know exactly how difficult it is when your friends go away to a school and you can’t join them.
Finances with my friends is always a touchy subject. I have one friend in particular who is very bad with money. I will always answer with great enthusiasm any question he has about finances. However, I would never open a conversation about his bad money management skills.
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It would probably not end well! I think it’s great that you are so supportive of your friend and you’re not letting it ruin your relationship. Hopefully, some of your smarts will rub off soon!