5 Money Lessons You Can Learn From Your Friends Who Are Broke
Having good friends is one of the best parts of life, especially if you have friends you can trust during the good and the hard times. It’s great to have people who share interests with you, who you can confide in, and who you can have fun with. Many of us struggle with having a natural competitive attitude when we are around our friends, and it is easy to fall into the pattern of wishing we had all that our friends do, whether that includes looks, money, or possessions.
However, sometimes part of being friends with someone is seeing the other person lose out or suffer. No one wants to see a true friend hurt, but in addition to comforting your friends when necessary, you can also learn from them. As tempting as it is to fall into the trap of wanting what your friends have, if you choose to, you can really learn from your friends’ mistakes — especially financial mistakes.
1. Don’t peer pressure spend
Yes, your friend’s new car is awesome, and it might look even better in your own driveway. However, if purchasing a new car would put you in serious debt, it just isn’t worth it. Most likely, you have seen firsthand what debt can do to someone. According to Debt.org, debt can have a huge emotional effect on a person. When we don’t have enough money, our choices are limited. Debt, of course, can also affect your ability to pay other bills, as well as your credit score. As tempting as it is to want to have what your friends have, remember to pay attention to those friends who have spent so much money that they are now truly suffering. Don’t take money from savings, make huge purchases, or use your credit card to play catch-up with your friends.
2. Start saving early
This is another lesson you can learn from your friends who are broke: start saving early. As fun as it is to spend recklessly and to believe you have years to start saving, this just isn’t true. The sooner you start saving, the better. You may already have friends who have maxed out their credit cards, or have purchased big houses and fancy cars and have no money left to put toward retirement or other types of savings. Or you may have older friends who warn you (either literally, or by the way they live) that failing to save enough can be detrimental to your future. While it’s important to set money aside for fun activities, it’s really essential to start saving money as early as you can.
3. Take your job seriously
With so many people looking for jobs, you probably have at least one friend who is living at home with his or her parents, or hasn’t had a job for months. Many people are out of work by no fault of their own (there just aren’t enough jobs in their field), but some people are out of work because they didn’t take their jobs seriously. You undoubtedly have a friend who partied too hard, came into work late too many times, or was just disrespectful or lazy too often. That friend is paying the price, and you don’t want to follow in their footsteps. Regardless of your age, or how far into your career you are, it’s important to take your job seriously. If you become too complacent, you could easily be broke in a few months.
4. Be wary of student debt
If you are considering a college education, be careful about which college you choose, because student debt is a huge problem for many Americans. According to USA Today, 71 percent of students took out loans in 2012, and the average student debt reached almost $30,000 in 2012. If you haven’t attended college yet, think carefully about what might happen if you amass a large amount of debt and then you can’t find a job to pay it off.
If you are years out of college, but you are considering graduate school, look around you. Graduate school might be the best bet, but there are many people who took on graduate school, or extra certificates, and are now drowning in debt and can’t pay those loans back. If you are considering paying for your kids’ college tuition, you also need to be think carefully about the amount of money you are willing to spend as well. As great as some expensive colleges are, sometimes at least starting at a more affordable school is a better idea.
5. Don’t rush to get married
In no way should you avoid getting married if you have met the right person and you are deeply in love and ready to make wise decisions together. However, don’t rush into marriage without thinking carefully about how you want the rest of your life to pan out. Take time to consider important financial decisions before you get married. Determine if you plan to have kids, think about your savings goals and your work goals, decide if you want to rent or buy over the next few years, and figure out who will manage the money, and if you will combine your assets. You can always mutually change your mind later, but since financial disagreements often lead to relationship problems, you will be giving your marriage a strong foundation if you handle these issues ahead of time. Divorce can be very expensive in addition to being heartbreaking.
It’s great to have friends, and hopefully you and your friends will mostly heed these five warnings. However, whether you have a friend who experienced a nasty and expensive divorce, or a friend who didn’t take their job or bills seriously, you can certainly learn from them and avoid the same mistakes.