Financial peer pressure is something that many people experience, especially teenagers and young people…
Direct vs Indirect Financial Peer Pressure
Financial peer pressure is when those around you influence your financial choices or actions, whether it be friends, family members, or colleagues.
This may occur directly or indirectly, with direct financial peer pressure being more clearly states whilst indirect is more based on what goes unspoken but can be observed from the social norms and behaviours of a group.
For example, if your friend told you that you should buy a new jacket because yours looks outdated, this would be direct financial peer pressure. However, if you felt pressured to buy a new jacket because you noticed all your friends had ones with more up-to-date styles, this would be indirect financial peer pressure.
Forms of Financial Peer Pressure
Financial peer pressure can take a variety of forms and can have more power over our financial decisions than we give it credit for. Some examples of financial peer pressure include:
- Feeling the need to ‘keep up’ with other’s lifestyles and belongings… this is something that is exacerbated by social media, where there is often pressure to look or act like those both around us and online
- FOMO – the fear of missing out on social events can lead us to spend money on things we can’t afford, be it a full-blown holiday or a quick drink at the pub that spirals into a night out
- Pressure to give gifts – the feeling of obligation to buy expensive gifts is something that hits particularly hard at Christmas
Does it Affect Teenagers and Young People More?
While all of us will face different types of peer pressure throughout our lives, including financial, young people are particularly susceptible to this.
One explanation offered by researchers is that reliance on peers’ opinions is almost an in-between stage for adolescents becoming more independent from their parents. As put by Steinberg and Monahen:
“the adolescent may become emotionally autonomous from parents before he or she is emotionally ready for this degree of independence and may turn to peers to fill this void.”
Therefore, it’s easy to see how if teenagers and young people are more susceptible to peer pressure in general, this can extend further into pressure on their financial behaviours and habits.
Research shows that teens primarily shop with their friends and enjoy being with friends while they shop. Mangleburg et al researched how the social influence of friends impacts teenagers retailing attitudes and behaviours.
They found that in studies they examined, “consumption communication with peers positively affects teens’ social motivations for consumption, materialistic values, and the tendency to use peer preferences in evaluating products”. In other words, teenagers tend to value the opinions of their friends, and may choose to shop with their peers to ensure their purchasing choices are ‘appropriate’ by seeking the opinions and approval of those around them.
Here, purchasing choices can be linked to social influence, with teenagers under particular pressure due to there often being a desire to ‘fit in’.