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Navigating financial peer pressure: Protecting your mental health

12 February 2024

6-minute read

Plan Well Healthy Finances How to

Don‘t let financial peer pressure put you at financial risk. (Credit: Pexel)

Financial concerns undeniably affect our mental wellbeing. In fact, studies show that 53% of Hong Kong citizens express concern over their financial future. 67% of Malaysians worry about the cost of living, and 61% of Singaporeans feel uncertain about their financial security.  

These worries cast a shadow over our lives, affecting our overall wellbeing. Persistent financial stress often leads to anxiety, depression, and sleep problems, disrupting our daily routines and straining relationships.

But what is the connection to peer pressure? Peer pressure or peer influence often occurs when one is compelled to engage in certain actions to gain acceptance and recognition from their peers. Recognising that peer influence can take both positive and negative forms is essential. The key to handling peer pressure lies in striking the right balance between staying true to yourself and fitting in with your group. Achieving this equilibrium ensures you maintain your individuality and wellbeing while enjoying positive social connections. 

What is financial peer pressure?

According to TalkLife.com, financial peer pressure is when friends, colleagues, or family members influence an individual's financial choices and actions. It happens when people feel the need to keep up with their peers' spending habits and lifestyle choices, even if it stretches their financial limits. 

This pressure often drives individuals to overspend, accumulate debt, or make financial decisions that are not in their best interest, all to fit in or gain acceptance within their social circle. 

Manifestations of financial peer pressure

Financial peer pressure can take various forms, exerting a powerful influence on an individual's financial decisions and behaviours. These manifestations are often subtle but can significantly affect one's financial wellbeing and mental health:

Matching the lifestyle of others: The pervasive need to align one's spending patterns and lifestyle choices with those of peers can lead to overspending and financial strain. Whether it is keeping up with the latest trends, buying expensive gadgets, or dining at high-end restaurants, the pressure to conform to peer norms can be relentless.

Fear of missing out (FOMO): The fear of exclusion or missing social activities can drive individuals to spend beyond their means. Whether it is lavish vacations, concerts, or exclusive events, succumbing to FOMO can result in financial stress and hinder long-term financial goals.

Social status and material possessions: In some cases, spending is viewed as a symbol of social status and success. The pressure to maintain a particular image through material possessions can push individuals to make unwise financial choices, prioritising appearance over financial security.

Gift-giving pressure: Special occasions and holidays can bring about substantial financial strain. The expectation to lavish friends and family with expensive gifts and treats may lead to budgetary overspending, contributing to financial stress during celebratory periods.

These manifestations of financial peer pressure underscore the complex interplay between social dynamics and individual financial decisions, emphasising the need for effective strategies to navigate these challenges without compromising one's financial wellbeing.

Overspending can cause overwhelming financial stress. (Credit: Pexel)

When social influence jeopardises financial wellbeing

Be it dining out, attending events, or embarking on a holiday, social activities often entail expenditure. The apprehension of missing these occasions for bonding can compel individuals to exceed their financial means. 

During such instances, the influence of peer pressure can be notably intense, as the longing to conform and gain acceptance can supersede prudent financial decision-making. Studies show that a person often yields to negative peer pressure due to a fervent desire for social validation and fear of rejection.

Consider a young professional with a tight budget who may find it difficult to turn down an invitation for an expensive night out with colleagues. They might worry that declining could lead to social isolation and hinder their career growth. 

Consequently, they may find themselves grappling with indebtedness and financial strain, thereby worsening stress levels and posing mental health challenges. 

It is crucial to recognise that prolonged exposure to this type of situation can affect one's mental health. Emotional symptoms may begin to manifest, such as:

Helplessness
Sense of failure or self-doubt
Decreased satisfaction
Detachment
and loss of motivation.

Strategies for mitigating peer pressure and prudent spending

A range of strategies can prove invaluable in navigating the challenges of peer pressure and ensuring responsible financial decisions. Here are five practical approaches:

1. Transparency and honesty

Cultivate open and honest communication with your social circle about your financial situation.  
Share your budget constraints with friends, colleagues, and loved ones to foster understanding and empathy.

Remember, faithful friends will understand your choices and try to engage in budget-friendly activities that strengthen your bonds. You are in control.  

2. Proposing budget-friendly alternatives

When planning social outings, suggest low-cost or free activities that provide meaningful experiences without straining your finances.
Consider options like picnics in the park, game nights at home, or exploring local attractions as enjoyable, cost-effective alternatives.

3. Assertive declination

Develop the ability to decline invitations to activities that exceed your financial limits graciously. 
Understand that true friendships should not hinge on spending but on genuine connections and shared values.

4. Establishing a realistic social budget

Create a budget that aligns with your financial goals and priorities, distributing a part of your income for social activities while ensuring responsible debt management and savings. 
Financial experts often recommend dedicating around 10% to 15% of your monthly income to discretionary spending, which includes social activities and entertainment

5. Seeking guidance and support

If financial worries significantly affect your mental health and overall wellbeing, consider seeking support from a qualified mental health professional. 
These experts can help you develop personalised strategies for managing stress related to financial pressures, promoting your mental health and emotional wellbeing.

These approaches enable individuals to effectively navigate the intricate landscape of peer pressure while cultivating responsible spending habits that ensure financial stability and enhance overall quality of life. 

"One thing to consider is how much we are in control of. A contributing factor to burnout is this unrealistic expectation or standard we strive to meet."

Dr Anabelle Chow

In conclusion, the impact of financial peer pressure on our mental health cannot be underestimated. As we navigate a world where social comparisons are constant and financial choices are often on public display, it is crucial to prioritise our wellbeing.

By recognising the signs of financial peer pressure, setting clear financial goals, and seeking support from trusted friends and professionals, we can protect our mental health and make financial decisions that align with our values and long-term goals.  

Remember, true financial success is not measured by external validation, but by the peace of mind and security we reach on our unique financial journey. 

References:

Rise of the Relatable Organization: Global Talent Trends 2022–2023 Study. (2023). Mercer. [online] [Accessed on 11 July 2023]

Wellness at Work Dashboard | Employment Hero. (n.d.). Wellness at Work Dashboard | Employment Hero. (n.d.). [online]

Soubrier, L. The cost of financial peer pressure for your mental health. TalkLife. [online] [Accessed on 20 July 2023]

Poonam Dhull, & Rajesh Beniwal. (2017). Dealing with Peer Pressure. Online International Interdisciplinary Research Journal, 7. Poonam Dhull, & Rajesh Beniwal. (2017). Dealing with Peer Pressure. Online International Interdisciplinary Research Journal, 7. [online]

Choosing Therapy. (2023b). Peer pressure: types, examples, & how to respond. Choosing Therapy. Choosing Therapy. (2023b). Peer pressure: types, examples, & how to respond. Choosing Therapy. [online]

Darling Downs Health. (2023, September 17). Signs you might be experiencing a burnout and how to regain balance in your life. [online]

Moneysmart. (n.d.). How to do a budget - Moneysmart.gov.au. Moneysmart. (n.d.). How to do a budget - Moneysmart.gov.au. [online]

Disclaimer:

This is general information only and is not intended as financial, medical, health, nutritional or other advice. You should obtain professional advice from a financial adviser, or medical or health practitioner in relation to your own personal circumstances.