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Social Wealth: Can Facebook Friends Affect Your Wallet?

Colorful crowd of paper cutout people Peer pressure—good or bad, subtle or obvious—comes with being in a social network. Everyone participates in social networks, even people who are never online. Your network consists of your family, friends and acquaintances. How strong is their influence, and can they impact your financial fitness or money management habits?

Who’s Influencing Us

Harvard researchers Nicholas Christakis and James Fowler, authors of Connected, have done fascinating work examining social networks and their impact. Their book describes how we’re so completely embedded in social networks that people we don’t even know are influencing our behavior.

“Behavior” is a broad category. In an eye-opening video, Christakis explains how social contagion from human networks shows up in our eating habits, political behavior, attitudes toward the less fortunate, emotional state and—of course—our level of financial fitness.

We’re in contact with friends and family regularly, so a lot happens through influence and imitation. We may not realize, however, that people at two degrees of separation (our friend's friends) or even three (our friend's friend's friends) also affect our behavior. Daniel influences his friend Ashley, who affects Tyler—then I imitate Tyler. In this example, Daniel—whom I don’t even know—impacts me without my knowledge.

Some things spread across a social network more easily than others. Eating, drinking and smoking habits of friends living hundreds of miles away seem to have as much influence as the habits of friends next door. However, as you’ll see, how strongly someone affects us depends on whether the person is a close friend or family member, or just an acquaintance.

Online Social Networks

Remember life before Facebook? Online social media connects us to a much broader network of people than we’d normally be. This leads to the somewhat scary question of whether online networks multiply our social contingency and the number of friend’s friend’s friends who can influence us.

In an interview with Wired magazine, Christakis explains online network research he conducted as a follow-up to Connected. Apparently, most Facebook “friends” are really just acquaintances. We’re less impacted by behaviors of acquaintances on Facebook, just as we are with people we know only on a surface level in our off-line lives. Evidence shows that our handful of real friends on Facebook can influence us, but our many distant Facebook connections have much less impact. Social media probably enhances the impact your friends have, not because you’re connected to more people, but because you have more exposure to your real friends’ behaviors.

Networks and Wealth

In online social interactions as well as day-to-day in-person interactions, there are some behaviors we see easily. Money isn’t often one of them. If we see financial behavior, usually it’s in the bad-example category. With money, what’s traveling across the social networks is lopsided.

For instance, on Facebook you’ll see pictures of that exotic, expensive vacation a friend just took. You’ll learn that your best bud living a thousand miles away bought a fancy red sports car (picture included). However, your friends are unlikely to brag about increasing their 401(k) contribution (statement included? NOT!). Few friends will point out the sale they passed up to save money.

What to Do?

Good or bad, your money management practices are influenced by your friends and friend's friend's friends. Here’s how to make others’ influence strengthen, not destroy, your wealthy habits:

  • Increase your awareness of the day-to-day goings-on of your strong connections and close influencers to see whose influence you want.
  • Create a "financial friends network" of good role models for wealthy habits, and discuss your financial fitness concerns with them.
  • Share your savings goals with a select group of friends using a tool like
  • Hide status updates from Facebook acquaintances who are obviously extravagant spenders.

Choosing the right actions is easier with positive peer pressure behind you. Take control and leverage your social network. While you’re at it, be a good financial role model for those around you too!

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