Friends and philosophies of personal finance

Recently one of my bridesmaids came to my city to attend a professional conference, and we were fortunate to be able to spend some time together as well. This is not a friend I had talked about money with before, despite having known her for over 15 years. It came up on this trip because she just quit her job in Boston to move to Atlanta with her fiance. She and her fiance just bought a house, she got a brand new car, and she's planning for her wedding — which is in less than a year and will have 125 guests. So on this trip, money was an active topic of conversation.

At one point she mentioned that she and her fiancé had to qualify for their house using only his information because her credit wasn't very good. I assumed there was inequality in our financial situations, so this was somewhat surprising to me. She has a professional doctorate in a medical-related field. Not only has she been making more money than I do per year, her work history is longer than mine.

Since she knows I write for GRS, she wanted to get my feedback on some of her financial habits and plans for the future. Once we began to compare notes, however, we realized we both had important things to learn from each other.

What she learned: Less is more

When she checked into her hotel, she couldn't find her ID at first. As she was digging in her small purse, she removed perhaps a dozen cards. Later, she mentioned that one of the reasons she had financial mistakes in her past was that she got overwhelmed by tracking due dates and verifying which accounts had a balance and which didn't.

I explained my philosophy, which is the fewer accounts you have, the less there is to track. The less there is to track, the smaller the chance that you'll make a mistake. I have three credit cards and only carry two of them in my wallet: 1) my daily-use card, which has a low limit but is paid off in full every month, and 2) my emergency card, which has a very high limit but no balance.

Since she and her fiance plan to merge finances anyway, she agreed that now would be an ideal time to determine which cards she needs, and which she can close — probably without even noticing a difference day-to-day.

What I learned: It's OK to splurge (If it is a splurge)

On the second day of her trip, she wanted to get mani/pedis. I wanted to make sure I wasn't being financially pressured, so I thought to myself:

  1. While it did mean spending differently, this is not something I do on anything even remotely resembling a regular basis — I didn't even get my nails done before my wedding.

  2. It wouldn't lead me to exceed the budget I had made to do things while she was in town.

  3. We'd already been hiking (free) the day before and had a free activity planned for the remainder of the day.

  4. It was a better option than something like a movie where we wouldn't be able to talk to each other.

So we found a nail salon and got our pamper on. I even opted for a couple of extras, like the sugar scrub for my feet and having flowers hand-painted on my big toes. If you keep a splurge a rare event, you not only appreciate it more, you can afford to spend slightly more when you do it.

What she learned: Fitting in and professional success

When I dropped her off at the conference hotel, it turned out to be next to some high-end outlet malls. I've lived in my city for 5 years and never been once. In fact, I honestly never even noticed they were there. She, however, strongly implied that she'd find the time to buy some clothes while she was in town.

However, I pointed out that she's moving to a completely new area of the country and transitioning from working at a public hospital into private practice. As a result, she won't know what the workplace culture is like until she's been there for awhile.

My supervisor brags about shopping at Saver's and Marshall's. So when someone at work tells me they like my outfit, I proudly describe hunting through the racks until I get a designer find at Goodwill for $4. And while I love the way my engagement ring and my wedding band look together, everyone at work only wears their band, so I model after them and save the major bling for evenings and weekends.

She saved some money and gained a new way of thinking about her new co-workers!

What I learned: Networking with strangers

I've always known my friend is the type of person who's never met a stranger. I not only got to see her in action on her visit, I also got an update on the unexpected payoff her friendliness yields her.

Not only did she meet her fiance on my honeymoon cruise, she befriended another couple on that trip (who were on their honeymoon). It turns out they live less than an hour from where she will be living now. She's kept in touch regularly on Facebook, and so the relationship was still warm when she found out she'd be relocating to their area.

Similarly, while she was out for her visit, she started chatting up someone at a bar. Turns out he was moving to Boston, and she has a ton of contacts in his industry. They exchanged email addresses so she can continue to help him job-hunt. While there's no immediate payoff for her, I have no doubt he'd be glad to do her a favor down the line. She's a master of building social capital.

Who changed – her or me?

While it's been over a decade since she and I went to college, my memory of her is of how alike we were. Time and distance have given me a new perspective. Finding out things about her that I didn't know also made me feel like we can continue to grow our relationship. We're not just resigned to rehashing our glory days — although that's fun too! But there's still more to do and learn as our lives change and we adapt to new situations.

How has your financial philosophy changed over the years? How many friends or family members have been privy to the evolution of your attitude towards money? Do you, like me, find it hard to even remember how you felt and thought about money when you were younger? What's the biggest money-related surprise you've ever had when talking to someone you thought you knew inside and out?

More about...Uncategorized

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others
guest
32 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
AMW
AMW
7 years ago

I have always been frugal since as far back as my paper route money when I was 12. I have had to learn that sometimes you need to spend…it isn’t always about money. EX: Recently, my husband and I just upgraded to smart phones after years of shunning them. Turns out that it is saving me a lot of time. I am self employed with multiple streams of income. It has helped me manage my business from where ever I happen to be so that when I get home I can spend time with my family instead of my computer.… Read more »

Honey Smith
Honey Smith
7 years ago
Reply to  AMW

Image is important. This reminds me of Stacy London and Clinton Kelly on What Not to Wear saying, “dress for the job you want, not the job you have.”

Alex C
Alex C
7 years ago

I love friends. They can teach us so much. They can instill wisdom on us so that we can be better people. We can learn a lot from our successful friends on how they do things, but we can also learn from our unsuccessful friends about what not to do. If they have poor money habits then you know not to do the actions they take unless you want to be broke.

Sam
Sam
7 years ago

If you are close enough with friends I think its great to share this information. Since I blog about out finances, my stuff is pretty much out in the open. But I’ve also learned from and shared information with my closest friends, like the women who were in my wedding and who are still my closest friends. Three of these women are sorority sisters so I’ve known them since college. One was always a budget master, raised by a single mom, and I would say she is still careful and a planner but she has to compromise with her hubby… Read more »

Pamela
Pamela
7 years ago

I’ve learned to use my laziness to my advantage. If it’s too much effort to go shopping, or if I’m going to have to go further out of my way to get a meal out rather than make it myself, I opt for the “easy” route. I think my personal money philosophy has changed in that I realized when I was making a lot more money, I was able to save a lot more. I don’t spend up to what I make by a long shot. I’m happy with what I have. However, it can get frustrating when you’re not… Read more »

My Financial Independence Journey
My Financial Independence Journey
7 years ago

Overall, I’ve become far more interested in building wealth and investing over the years. I can’t really say that my friends or family have influenced this change, since it’s really the end result of spending way too much time reading about personal finance.

steve at moneycents.org
steve at moneycents.org
7 years ago

I believe priorities change with our maturity, and our circle of friends influence our decisions and our splurges. I have been a bean counter since I was a teenager, and will scrimp and save on just about every thing. I do have a weak spot for my Starbucks coffee. To me that is a small reward for all of my saving. I currently save 24% of my total income. And my goal for 2013 is to get to 30%.

Mrs PoP @ Planting Our Pennies
Mrs PoP @ Planting Our Pennies
7 years ago

I don’t think a lot of my basic attitudes and approaches to money have changed too much in terms of the day-to-day things. I never liked spending for the sake of spending.
But what has changed is that I’ve grown more interested in investing rather than just stuffing money into a savings account. Seeing costs go up in the 12 years that I’ve been out of the house paying my own way definitely makes me want to stop losing too much money to inflation unnecessarily!

Jane
Jane
7 years ago

Can I push you on your point about losing money to inflation? I understand the concept, but I nonetheless find the anxiety associated with “losing” money that is saved but not invested in the market to be counterproductive. I think it can lead people to discount the tried and true value of saving money regardless of whether it earns a large return. Plus investments don’t always pay off. This is part and parcel of the same idea that led the timeshare guy on the Queen of Versailles movie to pull millions out of existing properties to earn more on new… Read more »

Scondor
Scondor
7 years ago
Reply to  Jane

Jane, For a good part of your grandparents’ lives the US was probably still on the gold standard. I’m guessing your grandparents didn’t have to deal with their savings being diluted by $85 Billion per month (that’s 85,000,000,000.00 per month, which is 1.02 Trillion per year, which looks like this: 1,020,000,000,000.00) When I see numbers like that, I understand Mrs. PoP’s concern about inflation. That being said, your main point is still a good one – no matter what inflation is doing, don’t be foolish with your money. The volatile stock market isn’t the only game in town, so learn… Read more »

LeRainDrop
LeRainDrop
7 years ago
Reply to  Jane

I think you have a good point — “losing money to inflation” still puts you further ahead than spending it on consummables, especially when such items end up not living up to expectations, not bringing as much joy/utility as originally anticipated.

Brendan
Brendan
7 years ago
Reply to  Jane

You might want to look into index funds. In general, buying stocks is glorified gambling, because you’re betting that you know more about the value of a stock than everyone else. Index funds are different because they’re designed to track the entire stock market, so the only bet you’re making is that the entire economy will continue growing. There’s very few times when the entire stock market has gone down significantly for more than a couple of years. You do need to be willing to hold onto your index funds even after they inevitably go down, but they always recover..… Read more »

Mom of five
Mom of five
7 years ago

I love this article. Everyone who’s known my husband and me over the long haul has seen us evolve financially. And like Honey, multiple accounts were one of the big things doing us in. We switched to automatic billing to our American Express card and our financial picture started to clear up pretty quickly. My biggest surprise financially was when my sister, who was a lousy manager of money, handed over all financial reins to her husband. It shocks me that she would give up control like that. She now lives on a small allowance. But she sees the huge… Read more »

Honey Smith
Honey Smith
7 years ago
Reply to  Mom of five

Your sister reminds me of my friend, who said she was going to give control of the finances over to her fiance. I was a bit surprised to hear this since I consider her overall a controlling sort of person. It turns out she’s just not interested in the money stuff (as evidenced by the fact that she got into a bit of credit trouble) and his finances are in awesome shape, so she trusts that what he tells her to do will be the right thing. Hey, whatever works, right?!

Jake Erickson
Jake Erickson
7 years ago

I think I may be coming into that age where money becomes more important because my friends and I have talked more about money in the past year than we ever have before. I’ve known some of these friends for decades, yet I didn’t know that they had x amount of credit card or student loan debt. I really enjoy discussing personal finances because you can learn something from just about everyone (either what to do or not to do).

superbien
superbien
7 years ago

Please tell your friend not to CLOSE her credit cards, just cut them up or put them away somewhere. If she already has dicey credit, she needs not to be closing a bunch of cards, that’ll impact her credit score. Just leave them open and don’t use them.

Honey Smith
Honey Smith
7 years ago
Reply to  superbien

I think if they’re open, she’ll use them, but I’ll mention this as an option.

She won’t need credit for anything anytime soon, the new house and car are already bought, though I am interested to hear more about how they finance their wedding.

Brendan
Brendan
7 years ago
Reply to  superbien

I always close my cards immediately if I don’t have any further use for them, and it hasn’t really had any significant effect on my credit. I imagine it might if there’s still significant balances though.

John S @ Frugal Rules
John S @ Frugal Rules
7 years ago

I know my attitude towards money has changed a lot since college as I was massively in debt then. Over the years I have become frugal and looking to grow our wealth as opposed to just spending to spend. Your point about splurging from time to time, when it is a splurge, is dead on. I had to learn that myself and am glad that I did as previously that’s all I did do.

Dona Collins
Dona Collins
7 years ago

I think it’s great to have such a long-lasting friendship – and one where you can be open on certain subjects only when you need to be. Sounds like you had the perfect opportunity to grow and get to know each other even more.

I have a friend I’ve known for 18 years. I’d love to help her with some financial planning issues she has (as her husband has left and she’s raising 2 kids – one with a disability). I just don’t feel like I can approach her about it.

Peach
Peach
7 years ago
Reply to  Dona Collins

That’s too bad. Raising kids alone is no picnic.

AFY
AFY
7 years ago

If your friend’s credit score is of importance in the immediate future, I’ll echo superbien’s warning against closing all of her unneeded credit card accounts at once — it’ll affect her credit score.

The other thing I’d recommend in general, too, is if you’re worried about your credit score and have good discipline, to use the high-limit credit card more often than the low-limit. Your score is partially based on debt utilization *per card*; it’s best to stay under 20%.

Honey Smith
Honey Smith
7 years ago
Reply to  AFY

See my reply to superbien above. Also, the interesting thing now will be seeing whether she goes from being RECEPTIVE to my advice to TAKING it. Not always an automatic!

Carla
Carla
7 years ago

I definitely had more money (higher income) in my younger years than I do now. My spending is more thoughtful than it was in the past. *I buy less books but use the library and actually read more. *Buy more clothes as needed but always on clearance or thrift. Better quality so they last longer. *I spend more on groceries but my diet is healthier. *Buy more beauty related items, but I do just about everything myself (hair, nails, etc) so I actually save more that way. Not being able to work full-time has changed how I spend money and… Read more »

Peach
Peach
7 years ago

Great post. I totally agree about splurging, it can be wonderful after a long period of saving and cutting debt. It creates a sense of balance in my life, like, yeah, I’m being frugal but sometimes I can treat myself and not wreck my budget. I also like the way we can see the good in our friends, even though they operate differently in the world. I may sometimes be an inspiration to my friends but they’re just as much of an inspiration to me just by being who they are, and not being afraid to let me see it.

Mike@WeOnlyDoThisOnce
7 years ago

Sounds like a great idea to have an emergency credit card with a high spending limit. How are the fees for these? Great post.

Anne
Anne
7 years ago

I really liked this post and agree on seeing what the new company “culture” might be like before buying a lot of new clothing.

However, and I don’t mean to be nitpicky, but I can’t imagine not wearing an engagement ring simply because others in the office do not do so. Mine is as part of me as the wedding band. Of course it is a modest one.

Carla
Carla
7 years ago
Reply to  Anne

I was wondering the same thing. Of course I’m going to wear my engagement ring whenever I can or I may as well tell him not to waste the time and money on one!

Then again, I never did or not did something (especially in the workplace) because other did/not do it. Assuming is appropriate or course.

Frank Powell
Frank Powell
7 years ago

The status of one’s personal finance gives a good measure of how well he or she is planning her life. Managing personal finance is very important from character building point of view as well.

@debtblag
@debtblag
7 years ago

“What I learned: It’s OK to splurge (If it is a splurge)” My opinion on splurging is that I should treat like every other one of my expenses — that is, I see how it affects my budget and if I’m ok with the long-term consequences (how much it slows down my debt pay-off or how much less I’d have in retirement) then I’m ok with the purchase. This also requires being honest with myself and making sure that I realize if it’s something that should be added as a recurring item in my budget and making sure to look… Read more »

Brendan
Brendan
7 years ago

I’m surprised that you didn’t mention mint.com for the “tracking lots of accounts” problem. I only use two credit cards (one for standard expenses, one for Costco, both get paid off every couple days), but I have a couple more for various reasons and Mint helps me keep track without logging in to all of the sites.

Peter Brülls
Peter Brülls
7 years ago

I fail to see where’s the problem in tracking multiple cards and accounts. Aren’t nearly all banks and the like online these days? Just get an appropriate app and put everything in.

shares