If you’re interested in making better financial decisions, it’s worth evaluating how your social circles shape your money mindset.
I have two main friend groups. In one, I significantly out-earn my peers. In the other, I’m middle of the pack in terms of career advancement and income.
After spending time with the first friend group (and especially if we talk about money/jobs), I tend to feel good about my financial situation and proud of the work I’ve done to grow my income.
After spending time with the higher-earning group, I always leave feeling like I could be doing more. I feel more dissatisfied with my current situation but also motivated to go out and hustle.
All this is to say: my perception of money (my own money and money in the abstract) is impacted by the people I surround myself with. This makes sense—as humans, we’re bound to compare ourselves with others. It’s how we assess our position in the social hierarchy.
It’s clear that our money mindsets are heavily influenced by our upbringings. In particular, the attitudes and beliefs of our childhood caregivers have a huge influence on our own.
It is also clear that’s it’s possible to change your money mindset (as I did) well into adulthood. Just as our childhood caregivers impact our money mindsets in childhood and beyond, the people we surround ourselves with in adulthood have the potential to impact our perception of money as it changes.
So if the people we surround ourselves with have such a huge impact on our money mindset, how can we use that impact to our advantage? Is it better to surround ourselves with those who have more? Or is it better to stay the big fish in a little pond?
How your social circles shape your money mindset
Here are some examples of how your social circles shape your money mindset:
You don’t know what you don’t know
Sometimes, seeing an example of success from someone like you opens your eyes to the possibility of you achieving the same thing.
I never imagined someone in their early-20s could pitch to VCs and build a successful company from scratch until I attended Stanford and saw my peers doing just that. It’s not that I believed it was impossible—I just didn’t even know it was an option.
Another example: I had never even considered creating a personal finance Instagram account until the algorithm happened to push an already-successful personal finance account across my feed two years ago. Before then, I simply hadn’t known finstagrams were a thing! Now, two years later, Organized Finance is a huge part of my life.
Surrounding yourself with people who are doing and thinking in new ways can broaden your own horizons as to what is possible. It also exposes you to a wealth of tried-and-tested knowledge on how to accomplish the things they’ve already accomplished.
Achieve mindset & habit changes
If you want to change your money mindset or habits, spending time around people who already think & act the way you want to can be particularly effective.
I say this from experience:
- I give much credit to my partner, who has a more Die With Zero attitude to spending money, for pulling me away from the scarcity mindset mentality I had developed from years of living with my parents.
- The personal finance community on Instagram regularly teaches me new things, keeps me accountable, and influences my financial goals.
If you want to become a better investor, find people who invest and listen to them. If you want to get into real estate, start be-friending people who are already successful RE investors.
Again, this isn’t particularly ground-breaking. As humans, we have an intrinsic desire to fit in & be socially accepted by our peers. Use this desire to your advantage by spending time around people who already do what you want to do.
Big fish, little pond
It’s important to distinguish between those who look like they have what you want and those who actually have what you want. If you want wealth, spending time around people who flaunt their expensive vacations and luxury cars may not be the best approach. Thanks to our innate urge to compare ourselves with others, spending time around people who are loud about the fact that they have more may leave you with feelings of inadequacy and discontent, rather than motivation. It also might cause “keeping up with the Joneses” behavior, potentially leading to unnecessary purchases and unhealthy financial decisions.
Related: Why no one feels rich.
That’s not to say you shouldn’t spend time around people wealthier than you. Rather, if you spend time around wealthy people, but make sure they’re truly wealthy and not just loud & irresponsible (a dangerous combination). Most importantly, focus on how those wealthy people built their wealth, and less on how they spend it. And of course, make sure you only adopt practices that align with your values and long-term goals.
TLDR:
By curating the company we keep, we can harness the impact of our social circles on our perception of money to cultivate a healthier and more balanced relationship with wealth.
If you want to start making better financial decisions:
- Join a community of people (in person or online) interested in making good financial decisions.
- Evaluate how your social circles shape your money mindset. Do your relationships push you to make better or worse financial decisions? How do they make you feel about your financial status?
The nuance you were waiting for
This conversation exists in a vacuum. In reality, much more goes into a friendship beyond one’s income, wealth, and ambition. In fact, one could argue that those are the least important traits in a long-lasting relationship.
I’d love to hear your thoughts! Comment below or DM me @organized.finance on Instagram.