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Is Your Social Life Causing Your Debt Problem?

A young group enjoying a meal out.

According to a 2014 survey conducted by Money Advice Service, the average social debt of the average Brit is at £1,260. With the average person blaming this debt on the demands of their social life and keeping up with peers and family members for fear of appearing tight-pursed. In addition, two out of the three people who answered the survey said that they spent more on a round of drinks than they got back and the third say that they lose out when the bill is split in a restaurant.

According to MAS, the people’s fear of appearing tight or stingy is fuelling overspending. The lack of self-control is another reason for asocial debt problems, 36% answered they simply get carried away and overspending.

However, venturing to pubs, bars or restaurants is not cited as the only social activity associated with debt. One in six admitted to the researchers that head off on holidays that they simply can’t afford.

“Individuals need to learn to say no to drinks, meals and holidays that break their budget,” said MAS money expert Jane Symonds. “I’d urge anyone in debt, due to their social spending, to take action now to avoid getting any further into the red and instead work at clearing it,” she added. “You’d be surprised at how empowering saying no can feel when you see how healthy your bank balance looks, and you can spend the money on things you really value or need.”

Jenni Trent Hughes, a social psychologist, also emphasised about honesty:

“If you’re honest and clear with a friend about why you can’t afford to spend money on something and you still find yourself being put under pressure, it’s perhaps time to have a quiet word with them or even rethink the friendship – real friends wouldn’t pressure you to do something you really can’t afford.”

According to a separate report by Nick Chater in 2014, professor of behavioural science at Warwick Business School, the urge to spend and keep up will be always etched in the genes of the people. Humans make use of comparisons to judge instinctively and this therefore dictate how people value their cars and houses. Comparisons can benefit humans in some other ways like when people competing, which may produce positive outcomes, such as wanting to obtain a better education or to be healthier, said Chater.

However, comparing really could lead to negative impacts to humans. “It’s the dark side of consumerism” said Chater. “Everybody values their car or house relative to other cars or houses. That means as everybody gets wealthier they get a nicer house or car. But because people think comparatively, they don’t gain any benefit, they don’t feel happier. They still have the third nicest car among their friends.”

As a conclusion, Chatter says, “But for many consumer goods, keeping up with the Joneses may be all we care about. If we all spend more on weddings, fast cars, or designer handbags, then, in comparative terms, no one feels any happier. This raises the danger that such spending is self-defeating, from the point of view of a society as a whole.”

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