Who are the people you spend the most time with? List them on a piece of paper. These people are potentially a source of financial influence in your life.

We’ll get back to your list in a sec.

Jim Rohn, the late business philosopher, once said, “You are the average of the five people you spend the most time with.” In other words, the people you hang out with have a profound influence on the person you become.

The same is true for your finances.

If there’s an area of your financial life that is a challenge, or that’s working very well, your circle of influence may hold some of the reasons why.

The price of peer influence

Someone with whom I went to high school told me a story years later, after he had gone to university and started down his professional path. We come from a small town where everybody knows everyone else’s business. As a teenager, it can be stifling, particularly when your parents are pillars of the community, as was the case for my classmate, whom I’ll call Derrick.

When Derrick headed to the “big city” to attend university, he finally felt free. He quickly befriended a group of guys who were determined to make the most of their parent-free liberty. Most nights, one of the guys would suggest they order pizza instead of making their own meal and the others quickly agreed.

“Want to go out for a pint at the pub?” one would ask. “Absolutely!” the others chimed in. And so it went for the entire first year of university. Someone suggests a fun activity; everyone else jumps in.

When Derrick returned home that first summer, he realized that he had not only blown through most of the savings he’d amassed as a teen, which were supposed to last for a few years, but he’d also spent all of the loan money he’d received. He still had several years of university left to go. Something had to change, and quickly.

“It became obvious as I looked at my bank account that I couldn’t just be one of the boys anymore, being pulled into expensive activities and eating pizza every night. I’d go broke.”

The Friday night ritual

Last winter, I ran a Money Management workshop for the employees of a professional business. When I asked if anyone had financial habits that were influenced by others, good or bad, there were a lot of nodding heads and pens scratching out the details on their worksheets, but no one spoke. Recognizing that they didn’t feel safe speaking in front of their work colleagues, I asked the attendees to email me their stories.

My inbox was deluged with their experiences. One in particular kept popping up. There was a tradition of going out for after-work drinks with colleagues every Friday. While everyone loved the ritual and the camaraderie, several people noted that they felt guilty doing it because they were trying to deal with credit card debt; spending at a bar made their problem worse.

They felt trapped. If they participate, they feel they have to buy something with money they don’t have to spend on drinks. If they don’t go, they feel left out, which might affect the dynamic at work.

I’ve heard similar types of stories from my Women’s Money Group members and coaching clients, whether it revolves around shopping with the girls, expensive weekends away, or the constant pressure to spend to keep up with the Joneses to bolster a sense of belonging.

The positive side of financial influence

Then there’s the flip side – people who bring out positive financial habits in you because of who they are.

When I was growing up, my father always said, “Only buy things when you have the money for them. Make sure you can afford something before you buy. Don’t go into debt.”

Not only did he say this often, he lived it. That had a big impact on me. I have never had credit card debt as a result, and I had never been in debt before being widowed at 32 and being left with $400,000 of mostly business debt.

I also had a whopping scarcity mentality going into my twenties – the result of that “don’t spend; money is hard to come by!” approach – but that’s a topic for another post.

What does it look like for you today?

Go back to your list now. Beside each name, write out a few points about how each person deals with their finances and how their behavior influences you.

• Do they spend a lot – e.g. frequently eating out?
• Do they buy the latest and greatest of everything – cars, houses, tech toys?
• Or are they great savers?
• Do they lead a lavish lifestyle that makes you wonder how they can afford it? Or do they appear to live within their means, reserving the bulk of their spending for areas they value highly?
• What types of financial habits do they appear to have?
• What impact do their behavior and their attitudes have on your financial choices?

I recognize that it’s hard to say for certain since most people keep their financial details fairly close to their chest. It doesn’t matter. Write out what you can. You’re looking to get a broad idea here.

I do this exercise with some of my coaching clients who are trying to fix challenging financial situations and in every case, there is an aha moment where they recognize the influence that some of their friends and family are having on them, both positive and negative.

What to do about unhelpful financial influences

If parts of your finances are a challenge, chances are there are clues to be found in your circle of influence.

Here’s the difficult reality: It’s hard to change your results if you’re constantly surrounded by people whose habits have a negative impact on your behavior.

In his book Atomic Habits, James Clear suggests that to develop effective habits, we have to make it harder to fail:

By simply removing yourself from an environment that triggers all of your old habits, you can make it easier to break bad habits and build new ones.

The rest of that habit-success equation involves making it easier to succeed. Even small improvements make a big difference in the end.

When I wanted to do more yoga, I moved my yoga mat to the front hall where it would remind me to head to the yoga studio.

If you want to eat a healthier diet, get rid of the junk food in your house and place a bowl of apples or a plate of raw veggies on your counter.

5 Tips

Here are some suggestions to help you get better results with your finances using James Clear’s approach and some of the strategies I’ve developed over the years:

1. Identify the activities that cause you trouble and consciously minimize or eliminate them.

If going out shopping with the girls typically results in a workout for your credit card, bow out. Tell them you’ll meet up for a coffee after their shopping spree. Ditto for the drinks after work scenario. Or, consider having a glass of carbonated water and nurse it for the duration of the outing.

2. Be honest with your friends, family members, and/or colleagues about why you’re changing your behaviour.

You might say, “I’d love to join you, but I’m committed to strengthening my finances. I’m tired of paying interest! My goal is to cut out a few activities for now so that I can spend the money I’m sending to the credit card companies on my family instead.”

When I suggested to a client that she do this with a girlfriend who loves to go out for lunch, her girlfriend decided to join her in tackling her credit card debt! You might just inspire someone else to improve their finances.

3. Find people who have the habits you seek.

If you want to learn how to invest, it helps to spend time around women who invest. To grow your income, spend less time with people who are broke and more time with people who are building wealth – people who have side hustles, entrepreneurs, and so on.

If you want to pay off debt or strengthen your finances in some other way, find “your people” – other women who are also working on improving their finances. They won’t give you a hard time when you say that you’re making conscious choices with your money.

4. Get clear on what you value and find people who share those values.

If you prefer kayaking or hiking to going out to bars, then befriend people who enjoy the outdoors. Your values are the key to achieving your financial goals. Take some time to figure out what really matters to you, then direct your spending accordingly.

5. Read The Millionaire Next Door.

The book should help reinforce the idea that building wealth does not require a large income; it is the result of conscious choices and good habits.

Keep asking yourself, “Who is influencing my behaviour?”, then make conscious choices about the people you spend time with. I can’t emphasize how important it is to spend time around people who want to accomplish the same things you do. 

Document the process in your journal. One year from now, you’ll be amazed at how far you’ve come.

ARE YOU LOOKING FOR A COMMUNITY OF LIKE-MINDED WOMEN WHO WANT TO GROW THEIR FINANCES AND THEIR LIFE?

Check out our Women’s Money Group – a safe, no-judgement space to learn, grow and thrive. 

*Photo by Linus Nylund on Unsplash