When I was in middle school (we called it junior high back then), I joined the swim team. Not because I was a good swimmer, not even because I wanted to. I joined because my best friend wanted to. Eventually, I got up the nerve to quit the team, but in high school, I joined the softball team for the same reason. We are wired to belong. We watch what our friends do, mirror their choices, and join in so we’re part of the “in” group.
In many ways, it’s a good thing: belonging boosts our confidence and sense of security. But when it comes to money, our need to fit in can prompt us to make decisions that don’t line up with our personal goals — or our money reality.
And here’s the conundrum: We often follow what friends are doing, while our friends are following what we’re doing. It becomes a collective illusion—everyone trying to match what they see, not what’s real. Let’s pull that apart with four specific examples.
Example 1: Keeping Up with the Joneses
Several research studies show that if your friend gets a new car or a neighbor buys a bigger house, you’re more likely to do the same. Why? To keep pace. To belong. The trouble is, we are keeping pace with an illusion based on what we can see – the visible spending. What we can’t see is whether the friend is now struggling to make car payments or the neighbor happily got a windfall inheritance.
So, say you buy a new car too … who else is watching your visible spending? It’s a spiral effect prompted by the mirage of keeping up (or not falling behind) and no one stops to ask themselves, is this really what I want? Or to ask their friend, “What made you decide on a new car? Are you happy you did?” Instead, keeping up leads to more borrowing and less saving.
Why it matters for saving/spending:
- Because everyone around you seems to be spending more, you think you should be able to afford the same things.
- You may spend more just to match people you consider peers, sidestepping your own personal goals.
- The perception that you have a tight budget feels like falling behind socially — and makes it hard to say no in the moment.
Example 2: Social-Media FOMO
With Instagram, TikTok, Reels and Stories, we see friends and influencers living what looks like a dream: trips to Italy, dining out, designer clothes. A recent study found that social media scrolling (which we spend a lot of time on) generates envy and prompts spending. Of women under age 30, 77% say they follow influencers or content creators, and half have made a purchase based on a post they read.
Why it matters for saving/spending:
- You forget that influencers are paid to lure you to buy. It’s their job to sell you a lifestyle and a set of values so you’ll buy something they didn’t even pay for.
- You can’t see how much debt or stress is behind a friend’s spending, because no one talks about money.
- The “everyone else is doing it” feeling lowers your guard and makes binge spending feel normal.
Example 3: Tipping and Public Norm Pressure
This is a subtler one. You’re not buying a car, but you are conforming. The amount people tip rarely changes based on the actual service quality (which is the purpose of a tip: “To Insure Performance”). Why? Because no one wants to look stingy. Research shows people feel a psychological cost if they don’t follow the tip norm because they worry about standing out.
Bars and restaurants know this, which is why they hand you the tablet with one-click tip amounts of 20 or 25%. Want to tip less? You’ll have to do quick math (while friends watch) and tap several more times on the screen, which makes it obvious you are tipping less. It’s pressure that costs you.
It may seem like a small thing, but tips add up. Americans spend an average of $500 a year tipping in restaurants and bars alone. And women spend far more when you consider salon visits, manicures, travel, and other services.
Why it matters for saving/spending:
- Small “social conformity” costs add up.
- Your budget silently drifts as you conform to group norms – buying a second glass of wine or tipping 20% – rather than your own spending plan.
Three money nudges to practice
Belonging is good. But when our need for belonging drives our spending/saving, we risk losing clarity about our own priorities. Here’s how you can nudge things in the right direction:
- Recognize the loop. Ask yourself, “Am I doing this because I want it, or because I think my friends do?”
- Share your money goals and rules with friends. Tell your friends before dinner out, or as you start planning a girls’ weekend. You might be surprised to learn they appreciate the conversation and feel less pressured themselves.
- Pause and reflect. When you see a friend’s purchase, pause and ask: What do I feel? What is my goal? What will this cost me in the future?
In short: Our need to belong influences our money behavior. The trap happens when we don’t pause to ask, “at what cost?” If we focus only on what we see others doing — and not on what we can’t see, or what our personal goals are — we lose financial power.
Sources: Social influence and consumption. Borrowing to keep up. How social media sharing drives consumption intention. For shopping…influencers have become a factor. The science of tipping