Why are people getting themselves into ‘socialising debt’?

This in turn can cause people to rack up debt to fund lifestyle habits for fear of missing out (FOMO) on the fun.

If you’re the person who earns the least in your social circle, it can be difficult to suggest cheaper alternatives – since everyone else has the cash to splash.

There’s also stigma around talking about money and debt; a recent survey from Portafina revealed that one in five Brits avoid talking to their friends about money and 24% stated that their friends can afford to buy things that they themselves can’t.

Beth, a 21-year-old living in Bournemouth, tells us she’s constantly going getting into ‘socialising debt’ because she ‘can’t seem to say no to going out with friends’.

She goes into her overdraft to afford new outfits, to pay for the gym and to have fun nights out.

‘My group of friends have a weekly tradition to meet up and even if it’s the end of the month and out of budget I always find myself there,’ she says.

‘Similar sort of thing when it comes to my gym, too. I went to a cheap and small independent gym local to my house but recently switched to a more expensive, further away gym because it is where my partner and his friends are members.

‘It’s hard to say no to an outing because it is almost guaranteed, that at some point, you will see photos or posts from the people that did go with how much of a good time they had and it will lead to me feeling like I missed out.

‘I’ve gone into my overdraft just to buy the latest fashion, attend the girls’ nights and be a member at the “coolest” gym so that I don’t have to miss out. I’ve even put event tickets on my credit card and paid interest rates monthly just so that I can put off paying it back until I have an influx of disposable income.

‘So truthfully, it is a never-ending cycle of doing more than I can afford just so that I don’t miss out on all the fun.’

Beth isn’t the only one who has to supplement her income to keep up with social spending.

According to research by KPMG UK, a company that specialises in audit, tax and advisory services, over half of Brits (52%) get into debt by using credit cards (21%) and overdrafts (13%), or borrowing money from a partner (12%).

Dr Roz Halari, a chartered consultant clinical psychologist at Cardinal Clinic, explains that while social media and FOMO plays a part, it’s not the only reason people get into ‘socialising debt’.

Some people can be prone to spending more money as a result of pre-existing psychological conditions or behavioural traits.

‘It can appear that we have unlimited finances – credit cards, store cards and promises of low interest rates coupled with poor information and unethical marketing can lead to overspending,’ said Dr Halari.

‘There are also psychological conditions that influence our spending behaviours: ADHD – spontaneity, impulsivity, poor impulse control – often leading to overspending and an accumulation of debts. Mood fluctuations – often episodes of mania can also lead to us overspending and poor finance management.

‘Personality traits such as obsessionality, impulsivity, spontaneity and factors such as low mood and low self-esteem can also predispose us to overspending.

‘People genuinely experience difficulties managing their finances, poor budgeting and inability to look at the consequences.

‘It can be argued on the one hand that they can be wired to be that way because it can become a conditioned response. On the other hand, overspending and saving can be part of their personality or presenting condition and it may even act as a coping mechanism.

‘Overspending certainly can be an addiction and even an obsession.’

Ella*, not her real name, got into debt after ending a relationship with a long-term partner.

In an effort to distract herself from the pain of the break-up, as well as make friends in a new city, she increased overdraft limits on two cards, as well as maxed out her credit card.

‘My outgoings for bills were already more than my wages, but being newly single and with summer coming up I was being invited to a lot of things and didn’t want to be home by myself – so I was going out every weekend, and even booked a holiday that someone invited me to because I didn’t want to say no or admit that I couldn’t afford it.

‘Because I was being charged a lot for the overdrafts and my credit card, and still agreeing to social situations, I ended up with a lot of debt. This started in March this year, and I’m still in a lot of debt – having to borrow money from family and my (new) partner.

‘Every time I get paid, I’m back in a bad situation financially within a week.

‘I also started a business with my ex and got a big business loan, which I have to pay every month. He won’t sign the business out of my name and has put the business into debt, so I could be sent to court. It causes me severe anxiety every single month.’

Ella hopes that she’ll be able to pay off some of her debt this month, through compensation pay that she’s due from a car accident that she was in two years ago.

Being in debt as a result of an active social life can be very stressful, and can trigger or cause mental health problems.

In 2010, the Royal College of Psychiatrists revealed that half of UK adults who are experiencing debt problems are also dealing with mental health issues – from anxiety to low mood, and more.

While it can be difficult to tell people that you can’t take part in the £50 secret Santa or would prefer to order the cheapest bottle of wine on the menu because it will save you a few pounds, there are ways to have these chats.

Sit down for a glass of wine or a cuppa with your friends in a space where you feel safe (your flat, perhaps) and gently explain that you’d like to save up more in coming months, and would prefer to do cheaper activities (or skip out on them altogether).

Don’t feel that you have to tell everyone about your debt  – who you tell is completely up to you, but if you feel it might lessen the FOMO, then it could be worth it.

Until you gather up the courage to open up, there are other ways you can also help yourself along.

Start by making a budget, so that you know exactly how much you can set aside for leisure, and do your best to not go over this limit.

If you’re mid-month and you’ve already reached spent your month’s quota, why not suggest a potluck dinner?

This way, everyone brings something and you don’t have to worry about rounds at the pub or three-course meals at expensive restaurants.

It might also be worthwhile taking out the allocated budget from your account and using cash going forward. Avoid getting new credit cards or taking out quick payday loans for expenditures like that group trip to Ibiza in 2020 – it will only exacerbate your existing debt situation.

Becoming an expert bargain hunter is useful, too; use discount sites like Groupon for adventure outings and beauty appointments, and check for deals on comparison sites.

Also consider which events are most important for you to be a part of.

If it’s your best mate’s wedding, you’ll likely want to be there but more often than not events of this kind are planned in advance, meaning you can try to save up ahead of time.

Then again, if the office is doing a round-up of cash for a colleague you’ve never spoken to, you can absolutely say no. Same if it’s your cousin’s dog’s birthday – stand your ground and tell them that Fido isn’t getting any treats this year.

Or – if the idea of saying no scares you – make a homemade present or buy something from a charity shop (and tell people you’re environmentally conscious, no one can argue against that).

The best way to deal with debt, however, is to be honest, both with yourself and your closest friends.

Unless it’s a very specific, one-off event that requires your attendance for obvious reasons (weddings is usually the big one, but not always), they should respect your situation.

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