Financially Toxic: 6 Types of Friends Who Are Harming Your Finances

"Show me your friends, and I'll tell you who you are." 

As the Greek proverb goes, our friends mould us. We are the sum of the people we associate with. Friends, like family,  shape who we are and who we will become. Of course, you are not alone in measuring your success by your social circle.

Whether they are constantly questioning your financial decisions or encouraging you to blow your budget, financial "frenemies" can have a major impact on your finances. When your friends negatively impact your spending habits, it may be time to make a change or establish some social ground rules when it comes to money.

In this article, we look at some characteristics of friends who may be having a negative effect on your finances and the most appropriate way to deal with each. 

1. Always Forgets Their Wallet

It's time to pay the bill, but this type of friend always "forgets" his/her wallet at home, or their wallets mysteriously vanish. “It's only 2k or 3k, right?” You reason out and decide to foot the bill. The problem comes in when this starts happening on a regular basis.

How to deal with this type of friend: Bring it up and talk it out with them. It might feel uncomfortable, but bringing it up won't be selfish. The friend might plainly be taking advantage of you and pulling the victim card. You could put them to the test as well by insisting that everyone will pay their own bills the next time you guys go out or split the bill and watch what happens. If they bail out or give a million excuses why they can't make it, then you'll have the proof you need.

Read Also: 6 Money Traps to Avoid

2. The Optimist

"You have been broke before, did you die? "It will all turn out alright." 

Are you familiar with these statements? If you're naturally concerned about money, you can read between the lines, but if you don't have set financial boundaries, you could fall for the statements above. Financial optimists often carry an optimistic outlook that is illogical, relying on luck to compensate for shortcomings.

This doesn't mean that you should be pessimistic, but being overly optimistic about your finances may make you forget about your own responsibilities. You will find yourself living just in the present rather than planning for the future. 

The "you only live once" approach may appear enticing at first, but after you realise you've spent your rent or haven't saved enough for a rainy day, that optimistic outlook will most likely turn you into debt or a negative financial state.

How to deal with this type of friend: Be clear about your goals with your optimistic friends. When you're feeling pressed to buy anything immediately, explain to your friends that you're intending to buy a property later that year or in the next year and are entirely focused on achieving that.  Clear statements of feasible goals will help your optimistic friends analyse their own financial prospects while also serving as a gentle reminder to you and them to cut back on spending.

Read Also: How to Go Broke in Under a Year

3. The Bully

A financial bully is someone who makes you constantly feel bad about your financial condition. This can take many different forms such as, when you say you'd rather stay at home than go out, you'll be met with an astonished “kwani ni doh hauna? You can't afford a weekend out?"

A financial bully will consistently make you feel bad about your choices. They will always find a way to mock you, whether it's about saving, investing, or budgeting. Financial bullies thrive on a feeling of superiority. They frequently target others based on their own weaknesses and insecurities. 

While your friends may mock you for having a tight personal budget, chances are, they also may be struggling to meet their own expenses. A financial bully will shift their focus away from progress and toward another goal.

How to deal with this type of friend: Financial bullies can be avoided by gently reminding them that your priorities are not the same. If a financial bully taunts you because you're on a budget, you can speak out and remind them that you're striving toward financial freedom and stability. When you stand firm with your goals, you become less of a target to them.

Read Also: Money and Emotions: How Fear, Guilt, Shame and Envy Affect Your Financial Goals

4. The Enabler

“Tumia pesa ikuzoee” “After all, you work so hard! You deserve the holiday!" 

That's always the mantra of the typical financial enabler. They always want you to spend, spend, spend. 

Going shopping with someone who encourages you to spend despite your financial goals is perilous. The issue with most enablers is that they usually don't do it out of malice but when purchase after purchase is warranted, even the most diligent savers will succumb.

How to deal with this type of friend: You can prevent an enabler from encouraging your spending by carrying exact cash when you go out with them. So, no matter how much they tempt you to spend when your allocated spending amount is exhausted, that's it.

Secondly, try to avoid some of the sources or locations where you overspend. By avoiding them, you deprive your enabling friend of their power.

Read Also: Bad Spending Habits That Are Making You Poor: How to Break the Cycle

5. The Pressurizer 

It's your friend's birthday, or baby shower and one of your friends is arranging a big party that's costly. Unfortunately, you're on a tight budget, and you know that taking part in their plans can quickly drain your finances. When you say you can't participate, there comes the pressurizer.

“Nowadays, you don't like hanging out with us.”

A pressurizer will normally want to go all out, and they expect you to do the same.

It's difficult to keep up with your friends, especially when they make you feel awful for not participating in group social events. However, whether it's a birthday party, a road trip, or concert tickets,  guilt and pressure should not be considerations in your spending decision.

How to deal with this type of friend: If a friend is guilt-tripping you with the "everybody's doing it" mentality, draw a few boundaries.  Perhaps you can't afford the vacation or participate in the party but you'd prefer a less costly meet-up. Let it be known to them. You disable a pressurizer's major ammo and demonstrate your friendliness by providing an alternative.

Read Also: 10 Warning Signs You are Living Beyond Your Means

6. The Show-Off

There's a big difference between someone who wants to share their excitement over a purchase with you and someone who wants to shove it in your face. It all comes down to motive because this type of friend wants you to be envious of their position, rank, belongings, and wealth.

"I got a big salary raise and I just bought the latest iPhone, "Could you even?" 

The show-off friend constantly manages to make you feel jealous or dissatisfied about your financial situation by boasting about his or her property, money, and other assets.

When someone keeps throwing material things and money at you, it's normal to feel envious - and this is usually a sign of a toxic friend. 

How to deal with this type of friend: When a friend is making you jealous of their new car or seemingly infinite bank account, consider what's genuinely bothering you. Is it about what they have or how that is, in turn, harming your finances?  You can devote less time to what your show-off friend is presenting and more time to how you're going to improve your own situation by setting your own goals and working on achieving them.

It's also a good idea to keep in mind that everything is not as it appears. A person who constantly asserts wealth and reputation may be struggling behind closed doors. If you focus on your own journey, you won't have to live up to an unreasonable standard. The goal is to avoid providing such friends with what they crave.

Read Also: Must-Have Investments That Guarantee You Will Never Run Out of Income

WRAPPING UP

You've probably encountered all, or some, of the friends we have mentioned above and if you haven't, you might be on your way there. 

In your social circle, there are people with a wide spectrum of personalities, views, levels of financial success, and peculiarities.  You may also be the financially toxic friend. So you don't have to completely cut relations with those that push you to indulge in bad financial behaviours. 

But If you've changed your approach to financial frenemies but still find yourself slipping into their spending traps, it may be time to distance yourself from them. 

Examine the true cost of that friendship – and respond appropriately.