On average, Americans are spending $250 every month on social activities with friends, a survey by Ally Bank found.
This price tag on connection may not appear to be all that bad on the surface, but three out of five millennial and Gen Z respondents said that their rate of social spending was having a negative impact on their financial health.
This is largely due to the fact that many young adults aren't properly budgeting for their social lives. Only 18% of respondents reported having a section in their monthly spending plans for social activities. Of those who did have money set aside for this purpose, 42% said that they overspent several times a year.
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Much of this overspending is tied to a fear of missing out, or FOMO. About one-quarter of respondents said they would feel left out if they had to decline a social invitation due to budgetary restrictions.
“FOMO is real and can lead to overspending that harms our financial well-being,” Ally Bank Head of Money Wellness Jack Howard said. "Be open with your friends if you can’t swing that brunch or birthday trip. You might be surprised to learn they’re in the same boat. Discussing money openly with friends can help dismantle the shame around financial struggles and is a great way to explore affordable ways to spend time together. Plus, the ultimate BFF is someone who respects your relationship with money.”
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Despite this encouragement, the survey found that millennials and Gen Zers aren't having these open conversations with their friends about their financial situations often. Some 24% of respondents said that they felt anxious about the perceived differences in financial/lifestyle situations between them and their friends. Additionally, one in five people said that there have been times these differences have left them feeling unable to be truthful about their financial situations with those in their social circles.
While many young adults feel the pinch of having a robust social life, nurturing friendships remains a top priority for them. About 69% of those surveyed said that, despite the cost, they still sought out intentional, in-person time with friends each week.
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While many of the activities they're engaging in do cost money— going to a bar/restaurant or attending a birthday party are among the most common ways friends are spending time together— not all of them do. Some 56% of respondents said they most often spent time with friends outdoors, and 23% said they prioritized finding ways to spend time together that involved spending no money.
“I absolutely believe you can have both – meaningful friendships and healthy finances – it just takes a little planning,” Ally Head of Consumer Banking Lindsay Sacknoff said. “Using tools like our savings or spending buckets to set up a ‘friendship fund’ can make it easier to say yes to plans without stress. Tracking your spending and planning ahead for things that bring you joy, from weekly brunch to birthday trips, will help you stay financially grounded while making lasting memories.”
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