The Correct Way to Spend Your Money

Social Influence Controls People’s Spending Habits

Have you ever found yourself wanting to purchase something but being unable to afford it? Have you ever thought that one day you’ll be able to afford those dream purchases? Have you ever felt as if you can’t live true to your goals and dreams because you can’t afford them? If so, you’re not alone. Most people find themselves in this exact circumstance.

The problem is that most people don’t take action to get themselves out of this situation. Most people let money take control of the choices they make, only using the last little bit of their paychecks to buy what they want, or at least what they think they want. The reality, however, is that many people really don’t know what they truly want, let alone need. Their neighbors, friends, and family end up influencing the decisions they’re making with their money because they feel as if they “have to keep up with the Joneses”. Now, as you’re reading this, you might be thinking to yourself “That’s not me. I am in control of my money”.

But are you really though? Be completely honest with yourself. A published New York Times Article (The Neighbors Marketing Powerhouse) talks about research suggesting that when one of a person's 10 closest neighbors purchase a new car, the likelihood of that person purchasing a new car, manufactured by the same car company, significantly increased. This phenomenon typically takes place because the opinions of friends, neighbors, and colleagues are critical influences.

Most individuals’ buying habits are influenced by their neighbors and friends to some degree. Let’s put it into perspective, can you think of the last time you asked a friend about their opinion on something before making a purchase? Social influence is real and it has a direct impact on your spending habits.

Unfortunately, more often than not, all of this social influence ends up resulting in buying products and services that you don’t exactly need. So before making impulse purchases, take a step back and try to ask yourself if it’s really the best use of your money or if you can allocate it to something better, like investing in your retirement.

Discover Your Values

One of the most important things you can do when it comes to the way you’re spending your money is to discover your values. When it’s super clear on what exactly it is you value, it becomes a lot easier to manage how you should be spending your hard-earned money.

But here’s the problem: Most people don’t know what they value.