Choose Your Financial Friends Wisely

By Jimmy Turner, MD
The Physician Philosopher

Jim Rohm believes that you are the average of the five people you spend the most time with. It’s also true that the relationships your friends have with money will affect your financial decisions. So, who are your closest five friends? Consider their habits and attitudes. Becoming adept at choosing your friends wisely is probably a pretty wise thing to do. It may be strange to think that your friends have an effect on your financial success–but it’s true. What do you know about social arbitrage? You may be surprised to find that you know quite a lot. It may be that you are subconsciously picking up your friend’s financial habits.  Are you friends with Dr. Jones or Dr. EFI?

Financial Arbitrage

Let’s talk about what arbitrage means in the financial world. It’s buying something in one market and selling it for a different price in a totally different market. Hopefully, you buy something for a low price (a good deal), and then sell it at a high price in the market (a much better deal). But today I want to bring the idea of social arbitrage to you: choose your friends wisely. There is actually behavioral science that supports the idea that we emulate the people surrounding us. Watching the relationship that your friends have with their money will also impact your views around money.

Examples From the Past

Think back to when you were a teenager or young adult. You can probably recall a relationship from your past. A friend who you spent the majority of your time with:
  • Your friend who was quiet and serious
  • The friend who was spontaneous and energetic
  • Your friend who was adventurous and took risks
  • The friend who was negative and had a defeatist attitude
Did you absorb their emotions and attitude? You’ll probably look back and recognize a change in yourself, you may have become more focused, fun, risky or pessimistic! We definitely mimic each other over time, none of us are immune. While it’s fascinating to see how much we are influenced by other people, it also means that choosing your friends wisely becomes imperative. Our advice? Choose to surround yourself with positive people who have the habits you either want to sustain or build.  Like the ones who have a solid Hell Yes Policy. Because you are likely to mirror the people you hang around the most… that’s how you become the average of the five people you spend the most time with!


Have you heard of mirroring? If you want to see an example, try googling the term “President Obama mirroring” and wait to be amazed by the images. There are pictures of President Obama sitting in an office with his legs crossed and his hands folded on his lap at a very specific way. There are multiple pictures of people sitting with him in the same fashion.  These are examples of mirroring. Another example is your children. They’ll pick-up your habits (both verbal and physical), especially the most irritating ones! It’s jolting when you hear a certain tone of voice that you’re guilty of using come out of the mouth of your mini-me! Your children mirror your behavior, and you mirror the friends that surround you. That’s why it’s imperative to make sure you choose your friends wisely!

What are some of the positive behaviors that you’ll want to mirror?

  • Prioritizing saving
  • Paying off debt before buying a house
It’s also possible to make decisions on the negative end of the spectrum. Physician financial literacy is rampant with bad decisions and examples. It’s easy to think that another physician who looks successful on the surface has made the right choices, so we take their advice or follow their example. Unfortunately, in the physician finance world that can be disastrous.

Choose Your Friends Wisely and Avoid the Peer Pressure

We all know that peer pressure is alive and well in the hospital parking lot. You drive up and see: Tesla, BMW, Mercedes, BMW…Toyota. What is wrong with this picture? That Toyota is yours! That’s when peer pressure starts, and you start thinking about parking your own nice car on the lot. The problem with that is the satisfaction will be very short-lived because cars aren’t your “thing”.  It’s hard learning the real secret to financial success (e.g. contentment). Most millionaires are very unassuming. You might be shocked to know they don’t all drive high-dollar vehicles.  It’s hard to break the cycle of peer pressure and keeping up with the Joneses. When you choose your friends wisely, you can avoid some of this peer pressure.  It helps to alleviate some of the social pressures. You think you see everyone driving a new car, while you are driving an older model. But if your friends think driving an old car is fine, you’ll be less likely to fall into this trap.  It’s all about focus, framing, and choosing your financial friends wisely.

What Happens If You Don’t Choose Friends Wisely?

We all have friends who love to spend money.  Maybe they are possession heavy.  Perhaps, their kids are in private school.  Or they love the fancy trips. Of course, none of these things are intrinsically bad.  But they all produce the image of wealth, even when the people in these lives are often the oppposite of wealthy. Truly wealthy people often aren’t flashy with it. Their money is busy at work somewhere else: savings, investing or paying off student loan debt. You can’t see that behavior, so you don’t consider emulating their positive and proactive behaviors. However, when you see the shiny, new car that’s the spending behavior that you want to mimic, but before you do check with your own values, priorities, and life plan!

Who are Your Best Friends?

Friends who are financially inquisitive and forward thinking are the friends who will inspire you. Conversely, if you surround yourself with lazy, negative people they can drag you down. They may even lead you to making impulsive decisions (e.g. expensive vacations) and purchases. You’ll know your friends are on the same page when they understand why you spend your money intentionally. They’ll get that you’re not attempting to create a facade to impress other people.  They see that your choices are authentic, and based on your personal and financial goals. I’ll give you an example from my own life. We were living in our starter home, which was 1,100 square feet. We had our three children, and two dogs in the house. The garage was full of stuff. There were people who came over to visit, and from their language you could tell they didn’t think it was “nice”. However, our best friends who had similar values? They understood. They knew we were paying off our student loans and that our plan was to buy a house after the student loans were gone. And that’s exactly what we did. When it was their turn, we didn’t pressure them to buy a house.  Why?  Because they were paying off their student loans, too.  They had more student debt, but they are currently paying down their debt and staying put in their current home. It’s a smart financial decision.  And one that is easy to support as friends who have similar views on personal finance. We’ve moved, but we don’t expect them to move. That understanding and value system works both ways. This is a perfect example of choosing your friends wisely.

What do you think? Does your choice of friendship impact your financial decisions? Have you chosen your friends wisely? Leave a comment below.  And listent to the podcast episode above!


1 Comment

  1. Brent Lacey

    It’s a great perspective! I’ve been thinking about the proximity principle in regard to the friends our kids make in the future. We should definitely be considering how our association with others will affect our personality, our values, and even our financial futures. Thanks for the great post!


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