The third point on the finance triangle is Friends. This one has the most ongoing influence in our financial life decisions. If you are interested in learning how family and faith influence your money decisions, please go back and read my previous two posts.
What do our friends have to do with our finances? Much more than we realize, believe it nor not. While we are all well aware of "keeping up with the Jones [family]," do we really know how that idea is influencing us? Stop and take a minute to make a list of your last 10 major purchases (goods or services). Now, choose several of your closest friends and list the last 10 major things you remember them buying. Compare how many items overlap. Having trouble coming up with ideas? Here are a few: school items or tuition, cars, homes, vacations, birthday gifts, anniversary gifts, financial planning services, accounting services… Still can't think of big things? Think about restaurants, gyms, hair stylists, and favorite stores. If you really want to get bold in your comparison, put down prices and frequency of purchases. This will really illuminate how similar your buying decisions are to your friends’.
When I did this exercise, one item that came up was a house. My wife and I bought a home recently, and it is remarkable how similar in size and price our home is to that of our friends who recently purchased homes as well. Many times, using our friends' buying decisions can be a significant help, because they save us time and energy in researching a great product or service. In other cases, it can have a profoundly negative impact. For example, if you buy a home that is beyond your price point, but you do it anyway because you figure if your friends can make it happen, then surely you can, too.
Why is it important for you to understand how your friends influence your money decisions? Because once you get it, then you have the power to change your situation. If you are like most of us, the way you spend money is not fully congruent with your values. Start making the changes you desire by first identifying what's holding you back.
Feel free to give me a call to talk more at 980-275-1627.
Ed Coambs
Edited by Reena Arora of Arora Media, connect on Facebook
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