Your Money_ The Missing Manual - J. D. Roth [151]
Leave your money at home. If you're worried that you'll cave to peer pressure, create a self-imposed limit. Take $5 or $10 or $20 with you, but leave the plastic behind. If you don't have the money with you, you can't spend it.
Limit yourself. Do things with friends, just spend less. Join your friends for happy hour, for example, but munch on the free food and buy just one drink. If your friends want to buy more, let them—but you don't have to.
Opt out. If your friends regularly do expensive things, politely bow out from time to time. By playing poker only once a month instead of once a week, for example, you reduce your costs by 75%. If your friends like to go shopping, join them for the companionship, but make it clear that you're there for the company, not the buying. (If the temptation to spend will be too great, don't go at all.)
Don't keep score. Don't obsess about what others do or don't have—focus on the relationships, not the Stuff. This can be tough, but it doesn't do any good to ask yourself why you don't live in a fancy 4,000-square-foot house on five acres. Remember: Life isn't a competition. Your goal isn't to keep up with the Joneses, it's to do what's best for you.
The most important thing is to be honest—with your friends and with yourself. Don't cave to peer pressure just to impress people. This can be tough if you're a people-pleaser, but it's vital to your long-term happiness.
And remember that peer pressure works both ways: Your friends influence you—and you influence them. So try to be aware of ways that your actions subtly affect those around you. Don't put people in situations where they're forced to compare themselves to you. Respect your friends when they say "no," and don't try to push them to do things they're not comfortable with. Don't suggest expensive activities to friends who have other financial priorities, and don't brag about money or flaunt it.
Each of us comes from different circumstances. Don't judge other people (or yourself) based on what they do and don't buy. Make smart financial choices for yourself and gently encourage your friends to do the same.
Lending and Borrowing
"Neither a borrower nor a lender be," Shakespeare wrote in Hamlet, "For oft loan loses both itself and friend." When a friend or family member asks to borrow money, your first inclination is probably to help out. But many people have learned the hard way that friendship and finances don't always mix. You can save yourself a lot of grief by knowing in advance how you'll handle these situations.
Some people decide that they'll never make personal loans: They know that if they're asked, they'll simply say, "Sorry, but it's my policy never to lend money to people I know." If you think this is harsh, you can follow it with something like, "But I'd be happy to help in some other way, if I can. What do you need?"
Note
Think very carefully before co-signing on a loan. As a co-signer, you're legally obligated for the debt, so if something goes wrong, you'll be stuck with the payments, a black mark on your credit report, and a broken friendship. If you want to help, it's usually better to lend money than to co-sign.
Not all loans between family and friends end in disaster. In fact, although there aren't any stats on the subject, it's likely that most loans go smoothly. But the potential for trouble is so great that you should think twice before lending (or borrowing) money. Ask yourself what would happen if the borrower never repaid the loan. How would it affect your finances—and your friendship?
You're likely better off saying "no" rather than putting yourself in a position where you have to hound a friend for money. Which would make you feel worse: the momentary pain of telling a friend "no," or the ongoing anguish of having the loan destroy the friendship?
Despite these warnings, there will undoubtedly be times you're tempted to lend money. When you do, be smart