Tejaswini Naidu, 22, didn’t feel the need to buy an expensive phone until she finally gave into peer pressure at her second job. “I never had an expensive phone but when everyone around me had one, I bought a OnePlus 6 (current cost: 34,000-plus) for myself by spending a month’s salary on it," said Naidu, who is a network quality coordinator at Oath, Bengaluru. “I could’ve bought so many other things with that money," she added.

The fear of social embarrassment is making young millennials spend more than what they can afford. “Millennials face a lot of social pressure to be seen as doing certain things," said Mrin Agarwal, financial educator, founder director of Finsafe India Pvt. Ltd and co-founder of Womantra. Peer pressure, or feeling a need to do the same things as other people of one’s age and social group in order to be liked or respected by them, usually has a negative impact on budgets and behaviour. Here are four reasons why many millennials go overboard, and what one can do to get back control.

The FOMO factor

The fear of missing out (FOMO) often leads millennials to succumb to peer pressure even when they don’t have enough money. “Often, I am unable to say no to my friends because I get insecure about being left out the next time they plan an outing," said Naidu.

Obligations can affect your personal finances, said Uttam Kumar Sen, a certified financial planner, and director at Step Ahead Investment Advisors Pvt. Ltd. “Take a moment to think about the consequences of your actions; prioritise your wants," he added.

Allowing obligations to dictate expenses can push a person towards debt, which can get increasingly difficult to repay. One may need parental support to pull out of such a trap.

To avoid being in such a financial situation, plan your expenses and decide your spends at the start of the month. “You should have a (separate) budget for lifestyle expenses and stick to it," said Agarwal.

The Poor-Me Factor

Shoumik Chatterjee, 22, a tax analyst at EY in Mumbai agrees that peer pressure is prevalent. “I have friends at work and when they plan a dinner, I can’t directly say no," said Chatterjee. “If I say no, I am considered antisocial. Sometimes you’re left with no choice." The inability to say no stems from the discomfort in discussing lack of resources. “Just one or two friends have been honest about being broke," said Chatterjee. It is difficult to admit being short of money, especially to friends. Planners suggest that being upfront early on in the work place about your own financial situation will prevent the need to keep up appearances. “Be open with your friends and colleagues and tell them you have exhausted your budget," said Agarwal.

Shoumik Chatterjee, 22, says he goes out with friends even if he can’t afford it, to avoid being seen as anti-social. Photo: S. Kumar/Mint
Shoumik Chatterjee, 22, says he goes out with friends even if he can’t afford it, to avoid being seen as anti-social. Photo: S. Kumar/Mint

The Social Media Factor

Social media as a moment broadcaster adds to the image that millennials want to create. Social media is indicative of how interesting one’s life is. “Peer pressure influences everybody but with social media it has become all the more prominent," said Milind Jadhav, a certified life coach at www.milindjadhav.com. “Comparing your life with your peers based on social media activity can provoke you to spend more," he added.

If your friends’ activities on social media are making you feel insecure or inadequate, then avoid it. “Involve yourself in other activities so you don’t get too much time to know what others post," said Agarwal. Remember that real swag is about who you are and not about what brand you wear or where you eat.

The Credit Factor

A 25-year-old from Bhopal (who did not want to be named) said that he bought a sports bike KTM Duke for 2.6 lakh on an EMI of 5,000. Six months later he was unable to pay the instalments and had to borrow from his parents. “My lifestyle expenses were too high and before I could realise, I had no money left to pay the EMIs," he said. Credit used to mean a credit card till recently, but with small unsecured loans offered by many fintech firms (called pay-day loan or cash advance), it’s getting easier to spend. “The only loan the previous generation took was to buy a house, but today’s consumerist age has made finance easily available through tools like personal loans," said Gayatri Jayaraman, author of Who Me, Poor?, a book based on urban poverty.

Delayed gratification is a difficult habit to build. An effective way to do this is to set objectives or goals. “Avoid taking your credit or debit cards when you go out with friends. Take cash instead. This will stop you from overspending. Use vouchers and special offers or try buffet dining," said Sen. Make use of portals and apps such as Nearbuy.com, or Zomato to get coupons and discounts.

If someone owes you money, ask for it. “Do what is good for you and your family, not what is good for everyone else," said Sen. If you are tempted to buy something expensive, ask yourself what it will be worth in a few months. Look at the pile of hastily bought but unused stuff in your wardrobe. Make simple rules—buy one only if I discard one—to give yourself a breather before hitting “add to cart".

There is really nothing ‘cool’ about being in debt. Or asking mum to talk to dad to zap some cash.

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