Sandy Smith’s financial journey started when her stepfather lost his job during the Great Recession. She found herself supporting multiple family members and two households. Her family, originally from Jamaica, was always frugal. To manage her budget, Sandy embraced the identity of a ‘crazy personal finance person’ within her friend group.
She became the go-to person for financial advice, maintaining a binder full of coupons and alerting her friends to deals they should consider. Sandy wore clothes from Walmart and plugged her shoe holes with cardboard. She also skipped vacations while her friends traveled. These actions enabled her to maintain financial stability during tough times.
In 2008, her experiences led her to create a personal finance website, Yes I Am Cheap. Sandy described her choice to be unapologetically ‘cheap’, a label she embraced out of necessity. She felt this identity helped her navigate financial challenges.
To spread her knowledge, Sandy initiated a Facebook Messenger group with her close friends. She organized an annual Zoom pajama party to set financial goals and scheduled quarterly check-ins to discuss finances. Over time, Sandy transformed her financial situation, moving from $200,000 in debt to a net worth of over a million dollars. Now, friends who once thought she was ‘out of her mind’ consult her for guidance.
A person like Sandy can influence not just a close circle but an entire social network. Social contagion is the concept where network behavior spreads. Members with more education and stronger connections often have a significant impact on the beliefs and actions of the group. A National Bureau of Economic Research study in 2024 highlighted that the more you are connected to high-income individuals, the more likely you are to invest and save.
Nicholas Christakis, a professor of social and natural science at Yale, notes that financial decisions are influenced by those around you, even indirectly. You are affected not only by your friends but by their friends and even by people you do not know.