Money is awkward for many of us, and social pressures can be just as tricky. When the two combine, it’s not only a recipe for discomfort; it can also drain your wallet.
Sometimes, when it comes to our finances, the best thing is to simply say “no,” but our desire to be a good friend or family member and not ruffle any feathers can push us to dole out cash we shouldn’t be parting with. And one CEO says it can add up over time to being a real bank account killer.
Fred Harrington is CEO of Vetted Prop Firms, a platform that helps traders make financial decisions, and he says that when it comes to money, emotions often override our logic.
“People think being financially responsible means cutting out lattes or skipping vacations,” Harrington says. “But the real money drain often comes from situations where we feel socially cornered into spending. Learning to recognize and address these patterns is one of the most powerful financial skills you can develop.”
So what kind of patterns are we talking about? Harrington says there are seven major ones that most of us have fallen into at one time or another, and breaking these bad habits can help get us back on the path to more solid financial ground.
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For many of us, there’s nothing quite so satisfying as treating our loved ones, but it’s very easy for this to spin out of control. If it’s $50-$100 an outing once a week, that’s easily $200-$400 a month, or nearly five grand a year.
Plus, Harrington points out, “when you always grab the check, you’re training people to expect it.” Boundaries are key, both relationally and financially, so he suggests taking turns with friends or just splitting things evenly.
Between the travel, attire, and gifts required for these events, the price tag can easily enter the four figures for just a single event. Multiply that by three or four events a year, and you’re looking at a serious financial hit. Sometimes, it’s the right thing to say “no.”
“Real friends understand when you can’t make it,” Harrington says. “Your presence isn’t worth your financial stress.” Instead, be selective, and remember that you don’t actually owe anyone an explanation for why you can’t make it. Keep it simple!
Tipping is a broken system, but it’s the one we have, and the people who wait on us depend on it to pay bills. Participating is the right thing to do. But overdoing it to try to offset the unfairness of the system can quickly add up.
“Standard tipping etiquette exists for a reason,” Harrington says. “Going beyond that consistently is unsustainable.” It’s not your responsibility to make up for this terrible system, even if the impulse is admirable!
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“The round system only works if everyone’s drinking at the same pace,” Harrington points out. “But often, someone orders top-shelf while you’re nursing a beer, and suddenly you’re subsidizing their night out.”
And booze is so expensive these days that it’s easy for a single round to top $100, and suddenly your night out is orders of magnitude higher than you can afford. Harrington suggests simply saying “thanks, but I’m good buying my own tonight” when someone offers you a drink, so that the expectation to reciprocate isn’t there.
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This is dangerous territory. Without agreed-upon terms, it’s incredibly easy for the lack of clarity to result in awkwardness and conflict, to say nothing of the lost money you may never be paid back.
Harrington says the number one rule is to never loan money you can’t afford in the first place. “If you can’t comfortably gift that amount, you shouldn’t be lending it,” he advises. If you do decide to lend, put everything in writing, including a repayment plan that you and your borrower both agree to.
Often, when our friends want the luxury Airbnb or pricey restaurant, we relent and go along with it even though we can’t afford it. But “going into debt to keep up appearances isn’t worth it,” Harrington warns. “People who truly care about you will understand your limits.”
It’s okay to be open about what you can and cannot afford. And if your friends aren’t willing to downgrade, you can always book your own Airbnb or bow out of the event entirely if need be.
Things can quickly become overwhelming if we feel like we have to buy a gift for every co-worker, acquaintance, or distant relative. Whether it’s holiday gifts or birthdays, that’s hundreds of dollars a year on people you’re probably not even close to.
“Gift-giving should come from a place of genuine affection, not obligation,” says Harrington. And when it comes to things like office gift exchanges, you are not obligated to participate, no matter what anyone says. It’s okay to set boundaries, or just opt for a simple card instead.
“We’re wired to avoid social discomfort, and spending money often feels like the easiest way out,” Harrington says. “But every time you say yes when you mean no, you’re teaching yourself that your financial well-being is less important than someone else’s perception of you.”
No one’s saying you have to become a miser who never does anything for anyone. But it’s important to put your own wallet first. As Harrington puts it, “generosity is beautiful, but it has to be sustainable. You can’t pour from an empty cup.”
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John Sundholm is a writer, editor, and video personality with 20 years of experience in media and entertainment. He covers culture, mental health, and human interest topics.
