When you think of your financial wellness, you are likely not considering how it may affect your social life or vice versa. While many factors may influence your financial situation, social influence is the component that is given the least attention. Both those who struggle with their finances and those with a more comfortable financial standing may experience changes to their financial wellness based on their social life, so it is crucial to understand the correlation.
Loneliness May Affect Your Financial Health Along With Your Physical Health
The American Psychological Association has made correlations between loneliness and increased levels of inflammation in the body and stress hormones. This may lead to adverse effects, such as an increased risk of cardiac disease and arthritis. Poor health may lead to more costly medical expenses and more time off of work. This expense increase and a loss of work time may eventually lead to problems with your finances.1
Your Social Circle May Lead to Increased Spending
Sometimes an active social life may lead to increased spending, sometimes even more than you can comfortably afford. If your social circle is comprised of friends that constantly spend outside of their means, you may find yourself mimicking their behavior. This may include making large purchases on impulse that may affect your future financial goals.2
Social Pressure May Lead to Poor Financial Decisions
No matter your social circle, fitting in may seem like the most important thing. Unfortunately, trying to impress friends by spending more than you have or making an investment you know may not be ideal may lead to poor financial choices and consequences. Instead of putting yourself under financial strain to fit in with a specific group, it may be better to reevaluate the relationship.1
Having a Strong, Supportive, Social Circle May Help Improve Your Finances
While some aspects of your social life may lead to possible negative consequences, there are some instances where your social life may improve your financial outlook. Being part of a supportive social circle and having friends that you depend on will improve your quality of life and may also improve your financial health. Supportive friends will likely provide you with time and other resources that may help you spend less. This could include lending you money at a lower interest rate or letting you borrow tools, or helping you complete a project instead of paying to have it done.1
Your social life may affect your financial goals in a way that you may not have considered. Take a good look at your social circle and lifestyle to see if it benefits your financial future or if maybe now is a good time to make some changes to prevent it from negatively affecting your financial goals.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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1 Financial Well-Being and Social Relationships Closely Linked, Gallup, https://news.gallup.com/poll/187616/financial-social-relationships-closely-linked.aspx
2 Americans unhappy with family, social or financial life are more likely to say they feel lonely, Pew Research Center, https://www.pewresearch.org/fact-tank/2018/12/03/americans-unhappy-with-family-social-or-financial-life-are-more-likely-to-say-they-feel-lonely/