Question: I’m just about to turn 25 and I’ve always been a little on the responsible side financially. I’ve read your advice on investing and I’ve already put away a substantial amount on a mutual fund. However, there are times I find myself spending more than what I should. It usually happens when I’m around other people. Help?—Ken S. via Facebook

Answer: You seem to be on the right track. However, remember that having an investment doesn’t mean you shouldn’t diversity.

If you’re spending more money when you’re out with friends, you’re responding to an unspoken need to keep up. People call it “keeping up with the Joneses” or “being trendy.” It is peer pressure, plain and simple.

Financial peer pressure manifests in spending hard-earned cash to make sure you get the latest items or the kinds of things bought by your friends who either can afford to spend more, or are living beyond their means. Perhaps, you can aspire to become like the first group of friends for they seem to have their financial house in order. This can mean they have enough money in savings and investments, and extra funds for a few “treat” expenses.

You definitely don’t want to be the friends who live beyond their means because their spending habits create financial problems.

Financial peer pressure can affect you. Many young adults may look to the spending habits of people near them to form their own.

I’m not saying that you cut your ties with these friends but you need to understand that saying yes to them can hurt your financial future.

Here’s how you can break the cycle of peer pressure, but still keep your friends:

Don’t let them get to you. Everyone has different circumstances in life. They might be well-off or don’t pay the bills themselves, while you’re the main breadwinner of the house. You shouldn’t overspend to keep up with them.

Shopping trips are dangerous because your friends put pressure when they see you look longingly at something. In such situations, it is a good idea to bring a fixed amount when you go out.

Keep your eyes on the ‘prize.’ The ‘prize’ here being your goal. Know that if you give into your friends constantly, it will take you longer to reach your goal. Saying ‘no’ or ‘maybe next time’ to constant badgering will be your best weapon against the pressure.

Suggest alternatives to having to spend. Your friends wouldn’t be your friends if they didn’t share interests with you. Instead of planning a night out, suggest staying in. Organize your friends every month for house parties.

You have limits, and we all have at least one friend who can’t seem to stop themselves from being trendy all the time. Having limitations and goals in life doesn’t mean you’re a lesser person. It only means you know what you want and you’re doing everything to reach it.

Here’s a brotherly tip: If your friends are pressuring you into flawed habits or worse, preventing you from breaking bad habits, it’s time to look for new friends. Wisdom is key.

How would you take the thought that you are stealing money from your future paychecks? Do you think that’s okay because you’ll have a bigger paycheck by then or the thought of it bothers you a lot?

That is what bad debt will do to you if you’re not careful with how you spend.

I will classify bad debt as money borrowed for debts that were spent on non-emergency situations. Some may think that a broken down smartphone or a travel getaway to another country with your friends. A funny definition of a bad debt is “using money you don’t have, to buy things you don’t need, to impress people you don’t like.”

But how will you avoid reckless spending that leads to debt? Here are some ways:

Change the way you see money.

The reason why most people go on a spending  ban and binge spend after a month or so is because they view budgeting not as a lifetime goal but a short-term goal. There are instances when you’d do it for a trip or for an immediate purchase but not as a lifetime habit.

This is just the same as being in a debt cycle. You weren’t born wanting to have debt for unnecessary purchases. This is fostered through time and repeated actions.

Make the most of your age.

Are you below 30 years?  This is the time that it will be beneficial for you to start investing and saving. You have more time to build your savings for retirement.  If you are over 30, don’t fret. There is still time for you to build your funds.

It will be challenging at first because it is not mainstream to live below our means. Achievement will be looked partially through your new gadgets or new car by your peers. Remember that your true friends will not care whether you have the latest models of anything but for your friendship. Avoid giving in to peer pressure.

This is also the best time to begin investing. Do you know that investing only P2,000 a month with an average yield of only 8% p.a. will give you over a million in 20 years? Imagine if you invest more and in diversified investments? You may want to look at pooled equity funds like mutual funds or UITF; or you can start buying select stocks yourself. Remember, study the investment first and never invest in something you don’t comprehend.

Protect your loved ones.

This doesn’t mean that you will stop causing debt, but this can go on until you die. I don’t think you’d want your loved ones to pay for your wrong financial decisions.

Look through your life insurance coverage you have. Can this be used as collateral commitment to your loans so that no one will be bugged by this in the event that you die? Look at every debt you have and assess if this will be stretched until 20 to 30 years. Discuss this with your family members and your co-makers so they will get an idea of this and provide their insights on how you can bring this down.

Don’t borrow money which will not help you make more money.

If you are borrowing money to put up a business, then that’s good debt.  If you are borrowing just to keep up with your neighbors or siblings, then that’s a bad one.

Ask yourself these questions before buying anything with borrowed money:

• Do I really need this?
• Can I find a more affordable option?
• Will this make me more money?

Compare prices before making major purchases.

Compare prices of smartphones with the same specifications so you’ll avoid overspending. Compare flights so you can get the cheapest rate to your destination. Never buy anything if you have not compared 2 to 3 option first so you’ll be sure that you got value for your money. I never buy anything on impulse,  I try to check out all options before making any purchase.

Find other streams of income.

Let’s face it: one definite way to avoid debt is to have multiple sources of income since this can empower you to buy items in cash. Find ways to get other sources of income through online portals like Raket.ph, Kalibrr, and other job boards. Multiple streams of income is a a good idea!

Final Thoughts

You can achieve anything you concentrate and focus on and avoiding bad debt is no exception. Keep in mind that having bad debt robs you of your future income so avoid it as much as you can. Debt can can be good, bad or ugly; wisdom dictates you know which is which.

According from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) statistics on car ownership, there has been a 27.6% increase in the first quarter of 2016 in terms of car purchases in the country. With down payments as low as P25,000 to P50,000 coupled by historic low interest rates, more Filipinos now have the convenience of owning a car that can help them get around.

Most people think that cars are depreciating assets but if you utilize your car, it can be a big income generator for you. You just have to be creative on finding income opportunities with your car.

Here are some ways to generate income from your car:

Register your car to an online transportation network

This way of monetizing your car is beneficial both for you and for passengers who are looking to have convenience while commuting. There are a lot of online transportation networks like GrabCar, Uber, or Wunder that you can join in order to get commissions based on the volume of serviced passengers.

Just remember to register your vehicle at the online transportation network, attend their orientations, and get the appropriate insurance so you can get the most out of your car insurance. Most insurers will not grant a claim when the insurance used is for a private vehicle.

Be a tour guide

This is an income stream that you can do over the weekend. Just determine the areas you are most familiar with and make itineraries that your customers can choose from.

Choose unique routes in the city which you think get many customers, such as a food trip route or a Pokestop tour. You can advertise your services through your friends and family, Facebook groups, and online forums.

Rent out your car

You can choose to rent out your car to either only people you know or through inquiries you get online. The good thing about this is that you can earn passive income here and also utilize your car if it was just sitting in your garage for the longest time.

What you can do to make sure that your car is safe is get a security deposit or a collateral so that the borrower will not be able to steal your car.

Downgrade your vehicle

This can be done through selling your current car and buying one with a lower fair market value. For some, it can be a last resort because their car is their priced possession. This can also save you money in the long run through cheaper car repairs and maintenance. The premium of your car insurance will also go down once you do this.

Offer carpooling

You can bank on some people to only trust a driver they know. You can offer to drop off your neighbors, their kids, and other people in the area to their schools or workplaces for a fee. Just make sure to compute your expenses so you can price this right.

This is not a common practice for Filipinos since they’ll see this more as a favor you can do for them. Make the benefits of carpooling and your commitment evident so they will agree to your service.

Use your car as a moneymaker

Don’t look at your car just as a depreciating asset. You can also capitalize on it to bring you extra cash by these tips which can surely get in additional income for you in the long run.