How To Conquer The Mental Challenge Of Spending Less With Your Friends
Let’s start off with some brainstorming. What are some common scenarios where we spend money with our friends and family?
Nights out, meals, birthdays, meeting up for coffee, work dos, trips out and hobbies. There will be more activities than just these, but what I am getting at with these points is the amount of opportunities we have in life to spend our hard earned capital on wants, especially when we are socialising.
If you have read some of my earlier publications you will know what the essential difference is between a want and a need, in relation to us spending our money.
How much do you spend a year on going out with your friends / colleagues and family? Furthermore, what do you actually do when you go out with these people and how much joy do you get out of it. Ultimately we have to use joy to calculate how worthwhile an expense is because it is the one absolute in life that makes life meaningful. For example, spending £/$3 a day on a coffee might provide you with a little boost of joy to help you through your morning meetings but compiling all of that money together and investing it to shave 4–5 years off of your working life before retirement, may provide you with a hell-of-a-lot more joy.
Side bar… You think I’m exaggerating the whole coffee thing? Go to my best friend, the compound interest calculator and punch in £/$60 monthly deposits for 45 years at 10% interest yearly (S&P500 average returns). You will get a number around ~£/$700,000 by the end of it, all for saving £/$32,400 on coffee (yes, inflation will change this number but you get the jist.)
Going back to the task at hand. Let’s set out a guide of how to calculate how worthwhile purchases are when you’re socialising and how to maximise your joy to expense ratio.
1. Calculate how much these activities cost.
Go through each of your socialising activities and work out all of your expenses. Go through every last drink, food and badminton racquet (probably a bit too specific for me, but you get the idea) that you have purchased due to being with friends and family. Put these numbers into a separate spreadsheet and make some pie charts or bar graphs showing how much these eat into your total income. Make sure to use percentages so you can say to yourself, ‘I spend 13% of my monthly net income on hanging out with Terry.’
2. Work out how much joy you get from these activities.
Put simply, how happy are you when you go for a drink with your friends? Or go for a round of golf or go on a day out to the beach or whatever it is you may do. How much real joy do you get from doing these activities. Do you spring at the chance to head out and socialise or does a part of you wish you could stay at home instead. Better yet, does a part of you really enjoy doing these activities but you recoil a bit when you see the bill at the end. Joy can be a difficult thing to quantify so you will definitely have to do some soul searching for this task and really think about your answers.
3. Determine if the joy is worth the price you have to pay.
The point of this article is not to stop you going out and enjoying activities with your friends. Definitely not. Socialising is a crucial aspect of our daily lives and all the better for it. But work out if how much joy you get from those activities is worth what you end up spending. If you’re hanging out on an activity for 30 minutes that has cost you 2% of your monthly wage and you forget about that activity in the near future, is it worth it? Don’t think about the time aspect or who you’re with so much, but think about is that exact activity worth it.
4. Switch activities around for ones that aren’t as expensive.
This is the important part. If you genuinely enjoy doing these fun things with your friends, family and work colleagues then keep doing them. But, find some cheaper alternatives. If these activities eat into your pay packet and mean you’re taking home 5,10, 20 or more percent less each month, of which that money can go into helping you be financially independent earlier or do some other thing which will give you heaps more joy then look for a switch.
Instead of going out for drinks every week (which can be seriously expensive, average pint of beer is now around £5/£6 in UK, source: me checking many pubs for a decently priced drink.) Perhaps, only go out once a fortnight or every few weeks, in those other weeks take it in turns to spend an evening round someones. Packs of beer are miles more expensive from a supermarket and you will end up savings hundreds a year, or more. You can do the same for coffee and meals out and a lot of things. Look at the activities you are spending the most money on and work backwards. Some you wont be able to change, for example, you need a football pitch to play football or you cannot watch brand new films at home before the cinemas have been allowed their time (however streaming services have changed this recently.) But take the time to look for alternatives for those that you can.
Final thoughts
Hopefully these step by step instructions can help you to save money on what can be a difficult place to cut costs. We find it easy to save money when it’s a ‘solo want’ but this can quickly change when friends are involved. The amalgamation of personalities can lead to some difficult decisions, especially if your friends and family are not the same savvy savers as you are. Some people can even take offense and think that you’re purposefully distancing yourself from doing things with them.
From my personal experience, I have been quite lucky. My friends have generally always understood that I like to save money and my family are very supportive of my saving habits. I respect that not everyone is in the same boat and how you approach this topic with your friends and family will be unique to everyone.
Just remember, if you enjoy hanging out with these people and doing these activities then remind them that you don’t want to stop spending time together. You merely want to switch things for cheaper alternatives so that you can save money to get yourself into a better financial situation. Good people will understand this.
As a final point, don’t race off to abandon all activities you do in the interest of accruing capital. Take the time and the money to enjoy life, if what you’re doing is costing a fair bit and there’s no alternatives but brings you immense satisfaction, then don’t give it up. Keep doing that activity and work on your other ways of saving and making money.
