Are You the Sum of the Five Bank Accounts You Surround Yourself With?

Why Your Friendships Could Be Costing You Your Financial Freedom

There is a common belief that friends and money don’t mix. Money has a way of complicating the dynamic of relationships, and the imbalance of power can strain even the strongest of bonds. Popular advice recommends resisting lending friends money altogether, or at least not any you care about losing.

One awkward experience is enough to convince most of us to keep friends and finances separate. However, now more than ever, we don’t live inside a vacuum. Jim Rohn famously said, “You’re the average of the five people you spend most of your time with.” Our output, performance, thinking, and decision-making abilities are all affected by the people whose company we keep. While we may try to isolate our friendships from our finances, their influence can not help but impact them.

Are Your Friends A Bad Influence?

We choose our friends for a myriad of reasons: humor, intelligence, empathy, proximity. In New York, only the strongest of connections can withstand distances requiring more than a single subway transfer. Yet it is the ability to have fun with a person that most draws us to them.

Time spent with friends often comes with a price tag. Enjoying someone’s company doesn’t have to equate with increased spending, but whole industries exist to convince people of the correlation between having a good time and doling out dollars. All of the coffees and brunches and nights out have a way of adding up, but we accept these costs because they are relatively low and imbue our lives with value.

However, what about the pressure to parallel a friend who leases a new car every two years, or collects limited-edition sneakers? To indulge someone who is constantly begging you to join them on vacation or needs you to be their wingman at a pricey club?

These tendencies don’t make them bad people, or even bad friends, but they do inhibit the progress of a new business venture or saving for retirement. As with all endeavors, environment has the potential to be a saboteur. If you want to lose weight, don’t bring home junk food. If you want to quit drinking, don’t hang out in bars. If you are attempting to get your money in order, you can’t immerse yourself among people who are unconstrained with their own. Their relaxed spending normalizes the behavior.

Maybe your crew isn’t the type to ball out every weekend, but they still might not be the best influence on your bank account. Often we gravitate towards people who are similar to us. If you’re not saving enough, there’s a good chance your friends aren’t either. If neither of you are saving, you’re probably not having conversations about money; and if you’re not talking about it, saving becomes an abstraction, something other people do.

If a friend gets a promotion at work, it prompts us to consider where we are in our own career. We see ourselves in our peers and expect our lives to unfold similarly. When surrounded by worker bees muscling through monotony, we may not be compelled to demand more than our current station.

It must occur to us to ask for what we’re worth, to act on ideas worth investing in. Growing our savings and starting a business must be natural concepts if they are to be attainable. Being mindful about money is a lifestyle. Success is built, not benevolently bestowed upon us.

Expand Your Vision

Being the first in your social circle to take your finances seriously can feel like navigating uncharted territory. Though the internet provides an abundance of information, the extent of its scope can be a hindrance, overwhelming us with data. In our lives and in our finances we tend to seek out recommendations from people we trust.

Your friends may be objectively wonderful, but if they believe the two savings bonds they received for college graduation constitute investment, they aren’t doing your portfolio any favors. You literally can’t afford to be complacent.

A money mentor’s positive example can inspire you to achieve your financial goals. If a friend starts a new business venture, starting your own seems within grasp. Being around others who concern themselves with building wealth reframes your perspective and offers new insight. These people embolden us to think big, invest, and appropriately value our work.

Just having attention directed towards making conscious financial decisions can have a profound effect. Talking about money begets thinking about money. The things we focus on are what we grow.

Scout Your Team

I’m not advocating anyone start looking for new best friends. It’s hard enough for a busy person to make time for the ones they have. Also, basing relationships on how much a potential friend earns is somewhat vile.

Figure out how you want your money to work for you, then find people who are doing that thing. If you want to start a business, find other business owners to hang out with. These are the people whose conversations are going to provide the insight for where you want to be. They need not be older to be aspirational. Comparing oneself with a mentor close in age can encourage some hustle.

Most relationships are symbiotic. Ideally, your lack of focus in finance has afforded you time to grow other areas of your life. If you’re interested in accessing someone’s knowledge, be sure to provide value to them as well. Nobody wants to feel taken advantage of. Go to their events, make relevant introductions, react with their social media. It’s good manners.

Don’t be afraid to look outside your industry. Entrepreneurs and freelancers often work alone, or others in our field are likely to be our competition. This doesn’t necessarily preclude animosity, but being in the same business can actually be restrictive in lending a new perspective. The way the bar owner down the block markets her wine program or lays out her menu may give you an idea for a marketing strategy or website revamp of your own. Outside stimulus can be impactful simply for the way it invites one to alter previous perceptions.

Set Boundaries

In order to get to where you want to be, you may have to make some sacrifices in the here and now. Friendship is meant to be dually beneficial, and true friends will be fine with meeting under less lavish circumstances in order to continue the relationship. Planning what you do together and how much you spend should be a discussion. Your frugality may even serve as an inspiration.

However, reserve your judgement on how your friends spend their money. Much of what we know of other’s finances is speculative. Whether it’s a latte habit or a second home, we can never really be sure of what our friends can afford. Regardless, a lot of things determine a person’s worth, least of all money, and righteousness doesn’t wear well.

Learning can be humbling, especially for entrepreneurs who may be uncomfortable ceding their status as the smartest person in the room, but every step towards financial security affords more freedom to pursue one’s ambitions. Seeking out people who challenge our ideas promotes enhanced performance.

Our friends are a reflection of who we want to be. A money mentor can help reveal where you want to go.