Are you surrounded by enrichers or drainers? Your friends and others you associate with can significantly influence your beliefs, emotions, and choices, when it comes to your money.
One of my best friends, who is actually like a brother to me, Black EnterpriseÂ Chief Content Officer Derek T. Dingle, once gave me a great piece of wisdom a while back, “There are only two kinds of people in this world; those who enrich you, and those who drain you.â€
I believe this is also true, when it comes to our money. You’re surrounded by people who either encourage good financial habits or who sabotage your ability to reach your financial goals.
When it comes to building and protecting your wealth, it’s important to know who your friends are. Here are a few clues:
They Only Come Around When They Think You Have Money
If your social interactions seem to revolve around pay days, tax refunds, and year-end bonus season, and friends are scarce when funds are low, that’s an obvious red flag. If they can’t think of any way to socialize with you that does not involve spending money, they’re drainers, not enrichers.
They Ridicule Your Efforts to Cut Back on Spending, Boost Your Savings, and Otherwise Positively Change Your Financial Habits
If their response to such changes is to call you “cheap” or “stingy,” then they’re not enrichers. Even if they don’t want to give up expensive dinners or weekly shopping sprees, they should be encouraging and supportive of you, as you sacrifice to achieve your financial goals.
They Treat You Like an ATM
However, they only make withdrawals, never deposits. If they’re always borrowing and/or you’re always treating, they’re drainers.
If you’re the person your circle of friends comes to when they want money, here’s how to stop being a human ATM:
Never Lend Money You Can’t Afford to Give Away
When anyone asks to borrow money from you, always ask yourself what would happen if they didn’t pay you back. If you really need to get the money back–to pay a bill, buy food, get to work, pay your mortgage or car note, reduce your own debt, and so on–you can’t afford to lend it.
Only Lend From Discretionary Funds
That’s whatever you have left over after you’ve put money toward your savings, your debts, your emergency fund, your retirement fund, and you’ve paid all of your bills and expenses. Not having money left means no lending.
If You Really Care About Your Friends, Encourage Independence; Don’t Enable Dependency
Constantly bailing others out of financial jams doesn’t really help them. If someone is always in financial trouble, help them by directing them to online resources, like BlackEnterprise.com or DebtAdvice.org. Whatever you do, stop making their money problems your responsibility.
The truth is, money habits are only partly a result of one’s level of financial education. The rest is driven by our behaviors and personalities that, if left unchecked, can do a real number on your finances. For example, you could be a “money martyr,â€ a person who just doesn’t know how to say “no” to family and friends. As a result, they come to recognize you as their personal banker and emergency fund. If you lend without demanding repayment, always pick up the meal tab or pay for gas, and even commit one of the cardinal sins of money management–cosigning on loans–you will not only attract drainers, you will create them.
While your intentions may be good, you are probably doing damage in two ways. First, you are likely hurting your own credit, creating debt and depleting your savings. Second, you are creating a culture of dependency among the people you care about, sabotaging both their willingness and ability to take care of their own wants and needs. You will naturally become part of a community of drainers, not enrichers.
Never put the needs of others ahead of your own financial obligations and goals. If you must (and if you can truly afford it), put a specific amount for family and friends into your monthly budget and never give beyond that amount.
Black EnterpriseÂ Executive Editor-at-Large Alfred Edmond Jr. is an award-winning business and financial journalist, media executive, entrepreneurship expert, personal growth/relationships coach, and co-founder ofÂ Grown Zone,Â a relationship educationÂ initiative focused on personalÂ growth and healthy decision-making. Follow him on Twitter atÂ @AlfredEdmondJr.Â