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The Moneyist: "They're leasing automobiles they will't afford": Our greatest mates share our pandemic capsule, however they’re recklessly spending cash. We could get in contact?

We have family friends who we've known since we had children a few years ago. Since then, we've gotten pregnant at the same time, weathered COVID-19 as a pod, and relied on each other for relationship and career counseling.

However, one thing that makes us sad is seeing all of the rough financial decisions they make. They lease cars that they cannot afford. They took out tons of private label credit cards. They spend more than they take home on stupid Amazon
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Things they don't need.

And they argue for money.

When we look into our future, we see summer trips and different school choices for our children, also based on the financial choices we have made. We've been honest soundboards during money fights, offering to take savings / debt classes, but old habits die hard.

At some point we will come to more forks where we have more options because we have more financial freedom. I don't want to ride this fork down without my friends. What can we do? How can we be good friends and not rejoice and preach?

I would love to have this friendship for decades, but I worry that the difference in spending and debt habits is causing our families' paths to grow apart.

Pandemic Pod 4ever

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Dear 4ever,

You have everything you need right in front of you. YOU are the best personal finance class they can have. One thing in particular influences us: our colleagues. We compare ourselves to them when we bake cupcakes on a Saturday afternoon. You are that for them.

I recently received a letter from a woman who was tired of her neighbors and co-workers trying to emulate her. But you should keep talking about your plans for your Chicken Maryland and how you plan to make those plans come true until they tell you to stop. Be open and transparent about your decisions. This is one time that it would indeed be a good thing.

Or, as this peer-reviewed study put it, "Peer compliance has a significant effect on consumer behavior." It doesn't sound like you're acting very “consumptive”, but your lack of spending shouldn't go unnoticed.

"
People who realize that they are spending more than their peers – those with a similar socio-economic status – will cut back on their spending. In theory it is.

People who realize they are spending more than their counterparts – especially those with similar socioeconomic status – will cut their spending, University of Chicago and University of Maryland researchers found in this 2018 article. In theory it is.

This study found that wealth can lead to overconsciousness and folly. Consumers in the lowest income group – those who earn an average of $ 40,000 a year – were more likely to be peer-influenced and actually reduced their monthly expenses by 19%. However, those in the highest income group studied by the researchers – those who earn $ 120,000 a year or more – have only limited their extravagant methods by 10%.

With that in mind, it wouldn't hurt to mention at a game of Scrabble that you're now putting money aside for retirement.

While eating Baked Alaska and playing Pictionary, you can say casually, “Johnny, tell Mary and Roger about the story you read on MarketWatch the other day. The one who scared us life. “Who doesn't like a good fear of bedtime?

I am referring to this story from my colleague Alessandra Malito. By the age of 40, ideally, you should have saved 3 times your salary and maxed out employer-sponsored retirement accounts such as a 401 (k) or 403 (b) plan. Talk about how you'd like to share that retirement.

Ultimately, however, it is the couples who share your pod that should write to me. As much as you want to help them, you can only do so if they are willing to help yourself. You can't live your life for you. You can lead your own life and lead by example.

You can email The Moneyist with all financial and ethical issues related to coronavirus at qfottrell@marketwatch.com

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Hello, MarketWatchers. Check out Moneyist's private Facebook
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