Millennials realise how keeping company with spendthrift friends can affect their spending habits and cause them to lose money over reckless shopping habits. This is evident from the results of a recent study carried out by Qualitrics on behalf of Intuit Credit Karma among young Americans that highlights how a significant proportion of Gen Z and millennials (36 per cent) report having a friend who influences them to overspend.
As a result, many individuals are resorting to incurring debt and, in certain instances, even ending friendships to safeguard their financial well-being. The survey detailed the following results:
- Among respondents from the millennial generation who have a friend who encourages overspending, a staggering 88 percent have accumulated debt as a consequence of their association with that friend.
- Similarly, 80 percent of Gen Z respondents who have such a friend find themselves burdened with debt.
- Millennials appear to be in a more precarious financial situation, as 15 percent admitted to incurring $500 or more in debt due to spending time with their spendthrift friend, compared to only 2 percent of Gen Z respondents in the same predicament.
- When it comes to the types of expenditures that contribute to their overspending, 43 percent of millennials with a profligate friend cited dining out as the primary cause, followed by drinks and nights out at 37 percent.
- Others mentioned more extravagant events like trips and vacations (22 percent) or birthday celebrations (21 percent) as driving up their expenses.
- Similarly, Gen Z respondents attributed their overspending mainly to dining out (37 percent), but also mentioned splurging on clothing (36 percent), drinks and nights out (32 percent), trips and vacations (24 percent), and even self-care activities (20 percent) such as massages and manicures.
Possible reasons for reckless spending behaviour
The primary reasons identified by young respondents for spending money they don't have when in the presence of their spendy friends are as follows:
Not wanting to feel left out: This motivation is reported by 31 percent of Gen Z and 32 percent of millennials who have a friend that encourages them to overspend.
Wanting to keep up with their friend's lifestyle: Approximately 29 percent of Gen Z and 28 percent of millennials express a desire to match their friend's spending habits.
Wanting to please their friend: Similarly, 29 percent of Gen Z and 28 percent of millennials indicate a motivation to please their friend by overspending.
Additionally, 28 percent of millennials admit that they struggle to say “No” to this friend, highlighting a difficulty in setting boundaries.
Millennials ending friendships to save money
Remember the age-old advice constantly reiterated by your parents, “Be surrounded by people who serve your purpose; get rid of them who will do you no good ever”. Many millennials seem to have realised the folly of being in a company that leaves them penniless or forces them to incur debt to pay off their expenses.
The disparity in spending habits is causing a considerable number of younger Americans to contemplate ending friendships due to their friends’ financial behaviours. This inclination was reported by 47 percent of Gen Z and 36 percent of millennials. Consequently, young individuals are now actively seeking out friends who have similar income levels. The study reveals that 35 percent of Gen Z respondents emphasise the importance of having friends who earn as much as they do, while 29 percent of millennials share the same sentiment.
Courtney Alev, Director - Product Management and a Consumer Financial Advocate, Credit Karma, shared, “If you're starting to lose friends over misaligned spending habits, it’s really time to just level set. It’s important to keep your finances and your friendships in order.”
Friendship and money do not seem synonymous with each other. The widening cracks in many friendships are attributed mostly to money matters, which is why you must be careful before you discuss money with friends.