Bernadette Joy spent $1,200 on alcohol while out in New York City one night a decade ago with a few friends, whose names she can't even recall. Now a 30-something entrepreneur who has paid off hundreds of thousands of dollars in debt and who documented her debt-free journey on social media and podcasts, Joy says the memory of this night still makes her wince.
"Isn't it telling that I don't even remember who else was there?" she says. "Not because of drinking, but because years later all I remember about that night was the bill, and clearly none of the other people were interesting enough to remember."
While the $1,200 was more than she usually spent on a night out in her early 20s — and, to be fair, it was someone's birthday — overspending at bars was common for her. During the first two years after college, she spent about $10,000 on drinks and dinners, primarily because she didn't want to be left out of social situations.
She's not alone: Almost half, 48%, of millennials have overspent, even potentially going into debt, to keep up with their friends, according to a 2019 CreditKarma.com survey.
Since those first few years after college, Joy's spending trajectory majorly shifted, and she paid off $300,000 in debt in four years by living a minimalist lifestyle. Here are her tips for resisting peer pressure and overspending:
Joy phased out any social media that made her feel bad about her financial reality and started following hashtags like #debtfreecommunity. Now, she gets to see people who encourage her to save, she says, as opposed to the "social media accounts where it's like, 'I'm in Greece with my Louis Vuitton,' without giving you the actual story of whether they can actually afford it."
As she's gotten older, she's overcome the fear of being The Cheap Friend, she says: "People are afraid and don't want to look like the person who is never buying rounds, because there is always that one person in the group that is always taking rounds and never buys one."
Instead, she suggests, opt out of the "rounds" and just buy a drink or two for yourself.
"Go out for tacos or a casual dinner instead," she says. You can have the same conversation, without yelling over loud music. And once you finish your meal, you can be done spending.
Invite your friends over for a board game night, as Joy started doing in her mid-20s. "I was like, 'Are we lame?' because here we are staying in on a Friday night, but we would order pizza and be up until 2 a.m.," she says. Basically, she realized, it was "the same thing, but I wasn't hungover the next day. I still had fun."
Another way to eliminate peer pressure is to surround yourself with people who encourage good habits.
Consumers who find out they spend more money than peers of similar income tend to cut back their spending. That's according to research done by the University of Chicago with data from Status Money, a platform where consumers can compare their finances to those who make similar amounts of money. Those making $40,000 per year decreased their spending by 19% after seeing what their peers spent, while those making $120,000 decreased their spending by 10%.
Cofounders of Status Money Majd Maksad and Korash Hernandez both previously worked for financial institutions where they saw that many people weren't making rational decisions with their money, Maksad says.
"Financial inertia mostly comes from a lack of understanding and fear you are going to make the wrong decisions," he says. "Fear of making the wrong decisions means you don't make any decisions at all. With things like switching their loans or refinancing or moving their investment to a new provider, people need social proof that other people are doing the same thing. They are the outlier, and they could do better."
More from Grow: