One of my personal finance books is the Millionaire Next Door. Without going into too many details, it explains how research finds that people who appear rich may not actually appear to be rich. It makes sense in hindsight since the people who are actually rich save their money instead of spending their cash on things that draw attention.
Another point I liked about the book is how teachers tend to have a huge amount of wealth. The idea is that teachers have high paying jobs with pensions and then often marry teachers. As you can imagine, they also end up hanging out with other teachers. Since everyone had similar salaries and lifestyles, there wasn’t much FOMO (although this book came out before Instagram.
It always made sense that your social circle can influence the way you spend in a positive or negative way. I’m not suggesting you need to break up with friends that may not be good for your money, but you definitely need to stay on top of things. Here are 5 friends that F up your finances.
The friend that always needs to borrow money
I had one friend that constantly needed to borrow money. To be fair, it was never a lot that the person asked for and that person always paid the money back on time, but I later found out that this person was asking multiple people for loans. I’ve always tried to help out friends in need, but I’ve learned over the years that lending money to friends or even family is just a bad idea. They may say it’s a one time loan, but it’s never just one time. I don’t doubt that they may be in a financial bind, but unless you’re willing to lose that money, don’t loan your friends any money.
The friend that always needs to eat out
I actually don’t have a problem who buy coffee or lunch every day since I’m pretty good at self-control, but I admit I’ve joined them on more than one occasion which has led me to spend money which I never planned to. To be honest, I don’t even care about this spending since I have automatic savings so it doesn’t matter that much if I spend a bit on food, but there’s no denying that if you’re constantly making runs to the coffee shop or food court, you could end up spending more. It can actually benefit you since you’re getting out of the office where you can actually enjoy your lunch hour.
The “financial advisor”
I understand the irony here since I write about personal finance, but I never give unsolicited advice and I make it quite clear that I’m not a qualified financial advisor. The people I’m talking about are those who join companies that are often associated to be or are pyramid schemes. Once they pass a few “tests,” they try to get you to hand over your assets to them to manage and if you’re not interested, they may even try to get you to join the company because he or she knows people who have retired after a few years. If one of your friends ever offer these kinds of services to you and you’re already questioning their qualifications, you may want to do some research the company to see what they’re all about first.
I’m talking about that person who claims they’re frugal but in reality, they’re just cheap. Sometimes it’s obvious such as when they order multiple drinks but wants to split the bill evenly at restaurants but sometimes their intentions are hidden such as if they ask you want to go to the mall but want you to pick them up. There’s nothing wrong with wanting to save money, and heck you can easily start asking for individual bills when you go out with them.
The other “financial advisor” sort of
The problem with financial advisors is that it’s a relatively loose term. Some people join certain investment firms and are instantly called financial advisors. To be fair, their level of training is much higher than the person above, the problem is, they’ll only offer you products that their company sells that often come with a high management expense ratio. There’s nothing wrong with this if you’re comfortable paying those fees but quote often the fee structure isn’t fully explained. If this is a good friend, they’ll go over the details with you, but you should know that they have a personal interest and stake since a part of the fees goes towards their pay