Your life is expensive: clothes, cell phone bills, internet service, cable TV, dining out, movies, concert tickets and nightclubs (with cover charges and high-priced drinks). How are you possibly going to afford all this on an entry-level salary? Maybe you need to change the people you hang out with.

The 40 million people in Generation Y (those born 1980 to 2000) have a combined disposable income of $200 billion. That's enough to make any product marketer salivate. The rest of the world pays close attention to the products you choose because you not only influence each other, but studies have found that your preferences shape your parent's purchasing decisions on everything from groceries to big-ticket items.

Your BFF Could Make You Broke
Shopping is a social experience for those in their late teens and early twenties. Peer pressure has always existed but today's youth have the power to share product preferences with hundreds in a single click via email, IM or Facebook. Personal recommendations may be a valid product selection tool, but it's difficult to be financially savvy when spend-thrift friends constantly barrage you with a never-ending shopping list.

You may not think you have a problem because you buy inexpensive items, but the frequency and volume of shopping poses a threat to already strapped bank accounts. When friends coax you to break your budget, don't be afraid to call them out on it.

Compare the price of their purchases to something practical but completely unrelated like six months of cell phone service. Use subtle anti-shopping signals. For example: when your girlfriend pulls an expensive dress off the rack and asks your opinion, just shake your head. (With a little planning, you can maintain your social life without breaking the bank. Check out Budget Without Blowing Off Your Friends.)

Once You Start Spending, It's Hard To Stop
Credit cards companies love Generation Y because they know you can't possibly have enough cash to buy everything you want. They expect you to use your credit card for everything from fast food to downloaded music so they can charge you high interest rates.

They also know that consumers tend to become more brand loyal with age. That's why they want to get you hooked on their stuff now, since they expect you to continue to be a customer for the next 20 years. (Make sure you're in control of the card and not the other way around. Read 6 Major Credit Card Mistakes.)

Shopping as a form of entertainment can become a lifelong addiction. It often leads to spur-of-the moment purchases. As your income increases, your shopping sprees become more expensive. If cruising the mall with your buddies has already become a habit, perhaps it's time to find a new hobby.

Be A Frugal Maven
It's also easier to buy stuff with 24-hour online shopping and credit cards for teens. So, what's a young, financially responsible person to do? Create save vs. buy coping methods like the following:

  • Keep an eye on people who spend responsibly and befriend them. You'll feel comfortable not having to say no to expensive escapades.

  • Let your friends know that you are working toward specific financial goals like a new car. They will understand why you don't take them up on every spending opportunity.

  • There are more things for you to buy because technology is changing at such a rapid pace. For example most people replace their cell phone every few years. It's difficult to keep up with everything. File all referrals to products you don't absolutely need today in a favorites email folder. It'll be there when you need it.

  • Don't pine over "stuff." Sitting around thinking about all the "things" you want to buy will only entice you to go out and spend your rent money on it. If someone around you is obsessed with an item, distract them by changing the subject.

  • Don't take all credit cards and ATM cards with you. If you don't have it, you can't spend it. (For more tips, check out Five Money-Saving Shopping Tips.)

  • Volunteer to be the pickup person for concert tickets and pizza. That way you can make the decisions about how much to spend. Have your friends pool their money ahead of time so that everyone contributes.

The marketing world revolves around you and your buddies. You control what becomes the next big thing. It is your responsibility to choose carefully. Start by carefully selecting your friends. (Learn what to watch for before you find yourself drowning in debt or filing for bankruptcy. Check out 5 Signs That You're Living Beyond Your Means.)

Related Articles
  1. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  2. Investing Basics

    10 Companies That Yuppies Love

    Learn about 10 companies loved by the modern Yuppie, including how this demographic's impressive buying power has boosted these companies' earnings.
  3. Professionals

    How to Build a Financial Plan for Gen X, Y Clients

    Retirement is creeping closer for clients in their 30s and 40s. It's a great segment for financial advisors to tap to build long-term client relationships.
  4. Economics

    A Look at Greece’s Messy Fiscal Policy

    Investigate the muddy fiscal policy, tax problems, and inability to institute austerity that created the Greek crises in 2010 and 2015.
  5. Home & Auto

    4 Areas to Consider Roofing Material Types

    Roofing your home is very important, that’s why you should choose a roof specifically designed to handle your area’s climate.
  6. Economics

    How Do Asset Bubbles Cause Recessions?

    Understand how asset bubbles often lead to deep, protracted recessions. Read about historical examples of recessions preceded by asset bubbles.
  7. Investing

    4 Things Millennials Can't Live Without

    Millennial investors are different from those in previous generations. Here are four Gen Y needs which are instrumental to understanding them.
  8. Professionals

    Advisors: Ignore a Spouse at Your Own Peril

    Financial advisors have their work cut out for them when it comes to keeping a spouse or partner in what was formerly a couple-client relationship.
  9. Investing News

    What Shook the U.S. Stock Market Today?

    What was looking as a decent year for US Stock market has suddenly gone off track as the Dow Jones Industrial Average plunged 531 points in the week ending August 23, 2015.
  10. Budgeting

    The Millennial’s Guide to Personal Finance

    It's a Millennial money minefield out there! Navigate it with these money management tips.
  1. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability ...
  2. Generation X (Gen-X)

    Generation X or Gen-X is the name given to the generation of ...
  3. The New Deal

    A series of domestic programs designed to help the United States ...
  4. Digital Immigrant

    People born before 1985 and who have adopted technology at a ...
  5. Digital Native

    Digital native is a term coined by Mark Prensky in 2001 used ...
  6. Gamification

    Gamification describes the incentivization of people's engagement ...
  1. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  2. How does the risk of investing in the industrial sector compare to the broader market?

    There is increased risk when investing in the industrial sector compared to the broader market due to high debt loads and ... Read Full Answer >>
  3. What is the range of deductibles offered with various health insurance plans?

    A wide range of possible deductibles are available with health insurance plans, starting as low as a few hundred dollars ... Read Full Answer >>
  4. How can I hedge my portfolio to protect from a decline in the retail sector?

    The retail sector provides growth investors with a great opportunity for better-than-average gains during periods of market ... Read Full Answer >>
  5. What is the correlation between term structure of interest rates and recessions?

    There is no question that interest rates have enormous macroeconomic importance. Many economists and analysts believe the ... Read Full Answer >>
  6. How do I know how much of my income should be discretionary?

    While there is no hard rule for how much of a person's income should be discretionary, Inc. magazine points out that it would ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!