I’m 38 years old with enough invested for traditional retirement. Here’s how positive peer pressure helped me, and can help you, accelerate your retirement savings.
Six years ago, I found myself in $300,000 of debt — including two mortgages — and barely any retirement savings. I’m ashamed to admit the main influencer of my saving and spending habits was to keep up with what I perceived as successful in my social circles. In my twenties, I wanted to be as fashionable as my friends and co-workers. In my thirties, I wanted to have as big a house as my family told me I should have.
But when I started pursuing financial independence and early retirement, I realized peer pressure I felt to look wealthy wouldn’t actually build wealth. I started looking for ways to save and invest without feeling like a total outcast.
Research Shows We Like To Spend And Save Relative To Our Peers
A 2020 study in the Journal of Behavioral Finance asked participants to budget an imaginary amount of money toward various categories of spending, including savings. The researchers then gave the participants social feedback on their savings behavior (poor, fair, great, or super) relative to other participants. “Fair” and “great” savers were categorized at random.
People labeled “fair” and “poor” savers were more likely to want to change their allocation and increase savings. This study showed positive changes in financial behavior can happen when people believe their performance is lower relative to peers, even among those they don’t personally know.
So, how can you turn that peer pressure to spend more into strategies to save more? Here are five practical steps you can take today toward saving for early retirement.
Mute Five Social Media Accounts That You Compare Yourself To Right Now
Studies predict social media has the biggest influence on shopping habits. And it’s not just following the retailers themselves, but also the influencers hired by these brands to promote their products.
When I started pursuing financial independence during the Covid-19 pandemic, I found myself scrolling a lot more while in lockdown, and buying gadgets and clothes out of boredom. After I bought a vegetable peeler I saw a friend share, an item I ultimately never used, I resolved to mute the accounts that encouraged impulse purchases.
Previously, you had to purposefully unfollow an account (making for an awkward interaction if you know the person in real life). Now, you can use mute options on social media platforms to still follow those accounts, but not have them show up in your feed. If I wanted to see what these people was up to, I’d have to make a conscious effort to visit their pages.
Substitute Five Accounts That Inspire You To Save And Invest
I started replacing food and fashion influencers with content creators who taught personal finance, real estate and entrepreneurship on Instagram, and consuming their content shifted my focus from just looking wealthy to building wealthy habits.
In particular, I found five accounts featuring diverse women who felt relatable and honest — Journey To Launch, The Finance Bar, Save My Cents, Poised and MissBeHelpful — while also being fun and entertaining. They do a great job of breaking down what would otherwise be complex financial concepts into ways that make me want to deep dive into learning more.
Plan Your Social Calendar Around Your Interests First
With most of my friends focused on careers, homes and raising families, I found my social events revolving around their availability rather than my own interests — music, comedy, travel and minimalism.
This year, I reversed the priority order. I started committing to go to dance classes, live concerts and places I’ve always wanted to visit. Then I’d share with the friends who would enjoy them as much as I would. If I didn’t have a friend to go with, I’d go anyway and make an effort to meet a new friend there.
Doing this significantly expanded the number of people I reach out to, the diversity of the people that I spend time with and it has been so much more fun than dragging along reluctant friends.
More importantly, I stopped feeling pressure to say yes to social events I was lukewarm about, and now I spend more quality time enjoying my interests, versus making small talk trying to impress people with job titles or material items.
4) Learn From Friends 10 Years Ahead Of You
You can’t predict the future, but you can learn from people who have already been where you are.
In my journey toward financial independence and early retirement, I’ve benefitted from the financial perspectives of friends in their forties and fifties, and not just my peers in their thirties like me.
I often feel like I’m behind financially when I compare myself to ambitious 20-year olds who became stars in the startup and content creator worlds. But, almost all of my older friends told me they wished they had invested much earlier, quit earlier or started something earlier.
I have three friends who are pursuing vastly different careers in their fifties who remind me it’s never too late to start investing in yourself and your future.
Positively Peer Pressure A Friend You’d Love To Retire With To Plan Together
In coaching women toward financial independence, most will tell me they look forward to traveling and taking up hobbies, but rarely do they think about who they will be doing these things with outside of their immediate family.
Watching my parents retire together, I learned you may not want to do everything with just your spouse or kids, or they may not be available when you’re ready to explore.
I have a few close friends who I share my financial planning with, and how I’m saving for retirement, without expecting them to necessarily share their plans with me. As a result, I’ve seen friends pay down student loans and credit cards faster, put more money in their 401ks and pay extra toward their mortgages, all after seeing the changes I’ve made financially to make early retirement possible.
Now’s a great time to think of a friend you’d love to spend more time with when you’re not working as much, and have an open conversation about how to positively influence each others’ financial habits and save more together.
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