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Gen Z and millennials on a budget say they’re dumping their wealthier friends because they’re afraid of lifestyle creep

Why can’t we be friends? Maybe because only one of us can afford to go to that new restaurant.

Over a third (36%) of Gen Z and millennials said they have a friend who often leads them to overspend, finds a new study from Intuit Credit Karma that polled over 1,000 young adults. For many of them, that means racking up debt—and dropping the friends in the process. At a time when both generations feel they're living paycheck to paycheck, it's no wonder they'll do anything to avoid lifestyle creep.

Read more: How much money should I have in my checking account?

The problem is worse for millennials, who likely have more spending money than Gen Z due to being further along in their careers and are also in an all-around pricier season of life. Eighty-eight percent of millennials versus 80% of Gen Zers with a “spendy” friend—which Credit Karma defines as someone who drives you to spend money you don’t have—say that spending time with that friend has put them in debt. And 15% of millennials said that debt totals at least $500; only 2% of Gen Zers said the same.

It makes sense that millennials are more impacted by their “spendy” friends. They more often find themselves in big moments of transition—like promotions, weddings, or new babies—which is when financial tension between friends tends to peak, financial therapist Amanda Clayman told Vox. Even bad transitions, like layoffs or medical emergencies, “affect what the financial norms are between friend groups,” Clayman said.

Between two recessions, crushing student debt, and a relentless growth in cost of living, building wealth has been miles out of reach for most millennials since they joined the workforce—the debt they’re taking on isn’t really something they can afford, even if they are making up for lost financial ground. The pandemic only deepened the wealth divide within the generation, which may intensify the pressure to keep up with the Joneses.

Many Credit Karma respondents said they're falling victim to friendship lifestyle creep because they don't want to feel left out, want to keep up with their friend's lifestyle, or want to please their friend. And many admitted they just don't know how to say "no."

For some, it can feel easier to simply cut off the friendship and stick with people who have similar spending abilities. But that's more likely the case for Gen Z than millennials—47% and 36%, respectively, said they would consider ending a friendship due to their friends' spending habits. And a third of Gen Z respondents and 29% of millennials felt it’s important that their friends earn about as much as they do.

“Spending money to keep up with friends isn’t anything new, but it could be a problem if people are starting to lose friends over misaligned spending habits,” Courtney Alev, a consumer financial advocate at Credit Karma, said in the report. “Talking about your finances with your friends could help alleviate some of the stress associated with money, especially if you have different financial situations.”

But over a quarter of millennials said they keep their income and debt a secret to avoid friends’ judgment. Credit Karma respondents in both age groups blamed dining out as the top expense they incur, followed by clothes shopping, drinks and nights out, and trips and vacations. For Gen Z, “self-care” expenditures like massages and manicures represented a sizable piece of the pie.

Social media exacerbates the issue. Watching wealthy peers flaunt their fancy vacations and shopping sprees can both create anxiety and add pressure to follow suit—even when, as a Bankrate survey found last summer, most people who make impulse purchases after scrolling through social media came to regret them.

It's not just younger generations; many Americans have admitted to overspending on things like clothes, fancy jewelry, or cars to impress their peers only to struggle with debt as a result. The problem isn’t limited to those who are cash-strapped; higher-income earners have reported more pressure than lower-income earners—likely because they have more cash to play with.

While cutting off friendships might feel dramatic, it’s not surprising that money can wield such power. People tend to follow social conventions to fit in, often to their own detriment. A 2018 working paper from the Federal Reserve Bank of Philadelphia found that neighbors of lottery winners were more likely to go bankrupt after they saw their peer’s rise in affluence.

Clearly, spending an outsize amount to keep up appearances is a bad move—especially considering that those spendy friends might be going deep into debt themselves.

This story was originally featured on

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