Once you have a job and start making it on your own, you may come across a point where you have a bit of extra spending money. At this point it becomes easy to over-spend, in many cases in an attempt to impress others.
This can be a big mistake, of course. Why jeopardize your financial future for the instant gratification of trying to impress somebody else?
That said, it can be a tricky habit to break. Here are five reasons why you may still be trying to spend to impress others.
Your Friends Do It, Too
It’s called “keeping up with the Joneses” — the desire or perceived need to spend in order to feel on a level playing field with your peers. If you look closely, there’s a good chance some of your friends are faking their financial lives as well.
It may be tempting to keep up with the things your friends are doing — fancy vacations, nice dinners and designer clothes. You don’t want to copy your friends into building credit card debt. Put another way, don’t spend beyond your means, even if that leads to feeling left out. At the very least, you will be left out of paying for credit card debt down the road.
It Gives You ‘Status’
The old saying says money isn’t everything, but when you’re working in a competitive professional field, it can sometimes be hard to realize that. Whether it’s natural instinct or the simple desire to fit in, there’s something about spending money that can make you feel like you belong to a given group or social circle.
That’s not a good enough excuse, however. In the end, your real friends will like you regardless of how much you spend. If a person doesn’t want to be around you because you don’t happen to value material things the same way they do, that says more about them than it does about you.
It may turn out to be quite the opposite. Down the line, some friends and peers may envy you because you were able to control your spending and build some financial stability for yourself.
You’re Not Thinking of Retirement
It’s enough work thinking about paying next month’s rent or round of bills. You may also be saving for something else, such as a vacation or a down payment on a house. With all of those concerns, retirement is not exactly top-of-mind, especially for people who have been in the workforce for less than 10 years.
You don’t have to be overly obsessive about your retirement plan, but it makes sense to start thinking about it. Spending money now just to feel the thrill of impressing someone else will only detract from the important long-term goal.
Millennials are the youngest — and the largest — generation in the workforce. They’re also the largest. And a good number of them have already begun saving for retirement.
But how much is the right amount to save? This can vary, based on your age. For example, if you’re 25 and want to retire at 65, the general rule is to try to save about 10 percent of your pay for retirement. However, if you’re 35 and want to retire at the younger age of 62, you may need to save up to 24 percent of your pay.
In other words, the earlier you get started, the less you’ll have to worry about it later. That’s far more valuable than impressing somebody right now.
You Like Giving Lavish Gifts
Gift giving can be a stressful exercise, particularly during the holidays. You may feel compelled to give someone the latest top-of-the-line gadget out of fear they’ll give you something nicer or that they’ll think you didn’t spend enough on them.
Your mother no doubt gave you lots of advice over the years, but one of the truest things she probably said applies to giving gifts: it’s the thought that counts. Of course everybody loves receiving expensive gifts, but that is by no means the only way to go about things.
The best gift-givers share a number of habits, including planning ahead and not focusing on cost. It’s much more meaningful to give someone something that has some sort of personal meaning or that can augment your shared connection with that person.
It’s Old Habit
If you do happen to have a little extra money in your pocketbook, it’s easy to spend a little extra simply out of the convenience of habit. This is not a strong long-term financial strategy, however.
Instead, focus on creating new habits when it comes to spending and saving money. Do your research, hold yourself accountable, have patience, and try to avoid spur-of-the-moment purchases. All of those habits will help you manage your money more successfully.
Spending money to impress is often the easy thing to do, and many times it feels great, but in 10 or 20 years you’ll feel even better knowing you didn’t blow money on pointless purchases and instead were disciplined with your cash.
While it may be hard to think about the long-term all of the time, it’s a good habit to get into for your financial future.