What does peer pressure in financial decision-making refer to?

Peer pressure in financial decision-making refers to the influence that individuals experience from their peers, which often leads to impulsive or less thoughtful financial choices. This can manifest in various ways, such as feeling compelled to spend money on items or experiences simply because friends or colleagues are doing so, even if those purchases do not align with one's financial goals or budget.

In many social situations, especially among younger individuals or students, the desire to fit in or appear successful can drive people to make purchases they cannot afford, or to prioritize immediate gratification over long-term financial health. This kind of pressure can lead to poor financial habits, such as overspending on clothing, entertainment, or dining out, ultimately impacting one's overall financial well-being.