Financial pressures are putting a strain on social connections – with 44% of Gen Z and millennials reporting they’ve skipped major social events because of cost
In an era where financial pressures are mounting, new research released today by Ally Bank reveals younger generations are paying a price to stay connected, and it’s impacting their overall financial health and wellness.
Released ahead of International Friendship Day, The Friendship Tab survey shows that while three out of five young adults admit social spending affects their financial goals, 69% still prioritize in-person connection with friends at least weekly. Ally’s findings highlight the balancing act many young adults face between nurturing friendships and working toward big financial milestones like paying off student debt or buying a home.
“I absolutely believe you can have both – meaningful friendships and healthy finances – it just takes a little planning,” said Lindsay Sacknoff, Head of Consumer Banking at Ally. “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.”
Notably, nearly a quarter say they fear missing out on social connections due to financial constraints, with 42% reporting to overspend on activities with friends a few months out of the year and 18% overspending every other month.
“FOMO is real and can lead to overspending that harms our financial well-being,” said Jack Howard, Head of Money Wellness at Ally. “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.”
The Financial Strain of Friendship
For Gen Z and millennials, the joy of friendship often comes with a financial cost that can be challenging to manage:
- 44% of Gen Z/millennials have skipped major social events because of the cost, with 1 in 4 saying their social spending makes building savings difficult.
- On average, people spend $250 every month on activities with friends.
- While the median for the total costs of activities with friends in 6 months is $750 for both men and women, the average for men is higher than for women ($1,775 vs. $1,250)
Yet the desire to stay connected is strong:
- 52% of Gen Z/millennials have 1 to 3 friends they see regularly, with some of the most popular activities including going to a restaurant or bar (72%), spending time outdoors (56%), or going to a birthday celebration (50%).
- In fact, 32% of Gen Z/millennials go to a restaurant or bar with friends weekly or more often.
- Friendship remains a priority, with 23% of Gen Z and millennials finding ways to spend time together without spending money, like through “no spend hangs.”
Overspending is the Norm, Not the Exception
Most young adults aren’t budgeting effectively for social life, and they know it:
- Only 18% of respondents have a strict budget for activities with friends, and 59% say their financial goals are impacted by spending on activities with friends.
- 42% are overspending on their social budgets several months out of the year. Nearly a quarter (24%) of Gen Z and millennials admit they’d feel left out if they had to decline social activities due to financial constraints.
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