The Influence of Peer Groups in our Life

As a kid, my parents were always concerned about my friends and the company that I kept. I never really understood why it took up such a major mindshare for them and why they were always so concerned about it. However, there is enough and more research now to show the impact that peer group has on us, even as adults.

Well-known motivational speaker Jim Rohn is known to have famously said: You are the average of five people you spend the most time with.

Pygmalion effect

Pygmalion effect is the name given to a psychological phenomenon discovered in the 1960s whereby higher expectations lead to better performance.

This is directly related to the company that you keep. These cues are not necessarily verbal. Sometimes when you are spending time with a person, you get an understanding of the kind of expectations the person holds of you without needing to have a verbal chat around it.

In effect, your peer group can often make or break you. Think about it, if you have a peer group which bonds over drinks and food and meets often, you are highly probable to be a social drinker. If you have friends who are ecologically conscious, you yourself might develop interest and a consciousness of the ecosystem.

This concept lends itself to personal finance also – spend more time with people who bond over shopping for the latest high-end brands and you will start routinely splurging too. Alternately, if you spend time with people who are money conscious, frugal and into budgeting, you are likely to pick up these healthy habits too.

Now, that you know just how important the company you keep is, how do you get a handle on the people you spend time with? Do you shun all existing friends? How do you decide who is good for you and who is not?

1. Track the influence of your current peer circle

Notice carefully the type of conversations and the life that your peer circle is leading. Is it something you would want to emulate?

Michael Dell put it well when he said – Try never to be the smartest person in the room. And if you are, I suggest you invite smarter people … or find a different room..

Peer groups are meant to lift you and your performance which would otherwise not be possible for you by yourself. So, make sure your current peer group does just that for you, by their own example.

2. Weed out the Whiners

Optimism is not something that comes naturally to humans. Initially, it takes a conscious concerted effort to be built up. That effort is compounded in difficulty if you are surrounded by pessimistic and negative people. Attitude is one of the most important influences that you pick up from a peer group.

You can try to help a whiner only so much. Be conscious of how you feel after interacting with someone you suspect is too much of a whiner. Do you yourself start seeing everything negatively around you and does it feel like all doors of opportunity are closing? Start with reducing contact with the person or mentally switching off when they go on a rant. If you still feel the negative effects of the conversation swirling around you, it might be time to nip in the bud.

3. Who makes you happy and lifts your spirits

To me, this is another important aspect. The role of being happy cannot be overlooked, and our peers can play a big role in this. When your day hasn’t been going too well, is there a particular person you think of, who you know will make you feel better and ready to fight the battle of life again? If yes, keep that person real close to you.

4. Look around yourself

Very often we fail to see things or people who are right under our nose. Is there an acquaintance, family member or a friend who you look up to or admire? Do you believe you could benefit from keeping their company? Who among the people you know will make you rise to the occasion?

Think back even to people where you might have come to the verge of fighting with people for something that you did not see in yourself but was for the better? For instance, my parents have always pushed me to perform better and that is probably why I still keep them completely updated with what is happening in my life.

5. Put yourself out there

If you believe you need more positive friendships or relationships in your life, be open to putting yourself out there. By that, I mean, when looked out for, today there are enough avenues to connect with successful people. Work on the basics of networking and try to find a way to get yourself included. Go to events for causes you believe in. Go to meetups which are on the basis of your passion. Meet new people and then choose intentionally and wisely for peers that will be a positive influence in your life.

Peer groups can either make you a better version of yourself or take you down in the dumps with them. It is up to you to rationally and consciously make a decision as to whom to spend more time with and let the influence rub on you.

Have you noticed the play of peers in your life? Did you face a problem where you had to consciously end a draining friendship? Let me know in the comments below.


Get your Personal Finance basics right. Sign up for the Elementum Money 5-day Email course for a crash course on all things Personal Finance, like Money Management,

Insurance, Investments, Loans and Tax Planning.

Also, get notified of all new Elementum Money posts.

Sign up for the 5-day Personal Finance Email Course

* indicates required