Michelle Laurey produces stories on finance, entrepreneurship, and productivity. She is a virtual assistant for a few SMBs. Having a few loans and credit cards forced her to become financially literate and change her perspective on money. Now she is slowly reaching the financial independence. Outside her keyboard, she enjoys a good book, healthy food and bike rides. Reach out to her on Twitter.
Keeping up with the Joneses is a phrase we are all heard (!!! – editor).
But did you know it stems from a cartoon strip from the early 1900s?
The premise was that many people try to keep pace with their neighbors’ overall lifestyle and spending habits even when they cannot afford to do so.
And is just as relevant today as it was more than a century ago.
Today, many people are so focused on what their outward social status and lifestyle are that they spend well beyond their means and wind up in debt.
Wealth has nothing to do with spending habits. Even winning the lottery will be short lived if you don’t have the discipline to keep the money around. You are not wealthy if you can’t keep money to your name.
This holds true for the same neighbors and friends who you may try to keep up with.
These are five top reasons why you need to adjust your mentality and stop trying to keep pace with other people.
The Danger Is Real
Buying stuff can make you feel great if it doesn’t meet with immediate buyer’s remorse and related financial stress. However, many people make purchases they cannot afford because of Conspicuous Consumption.
This term describes the need to portray your current social status or even to advance your status through the purchase of luxury items. While this is run on your intrinsic motivation, social pressure can force you to keep pace with your friends, neighbors, and coworkers.
Succumbing to the social pressure can devastate your financial situation over the years.
Because credit is widely available to most income levels, it’s difficult to determine who is spending cash they have on hand and who buries themselves in debt to keep pace with others.
A study from the University of Alberta revealed that a person’s chance of filing for bankruptcy increases by 2.4 percent for every $1,000 their neighbor won in the lottery. Keep in mind that this is a global problem.
For example, over the course of a 31-year period, consumer debt related to productive purposes fell by 24 percent while debt related to frivolous consumerism exploded.
Before you make a purchase, ask yourself what the purpose is.
Do you really need a new watch?
If you have a legitimate need for the item, you can buy an affordable vehicle just as a luxury car.
You Might Be Competing with Perfect Strangers
At one time, Conspicuous Consumption was linked only to the lifestyle of people you knew, but social media changed this.
For example, you may see friends of friends posting pics from a nice dinner out, a new car, building a home or taking an amazing vacation.
Through FOMO or a fear of missing out, you may be inclined to keep pace with perfect strangers.
Conspicuous Consumption is based on the wish to appear successful to others.
Sometimes, people get an innate desire to make others envious of their own experiences.
Still, others want to live life to the fullest, and they may think they are not enjoying the rich, fulfilled life they should be if they do not keep up with others.
Remember that your friends, neighbors and even strangers only post the best moments of their lives on social media.
While you witness the evidence of their spending, such as a fancy new watch or a new wardrobe, you do not see their credit card bills or their sleepless nights as they worry about their lack of savings.
You Don’t Have to Please People
Regardless of your income level or social class, reckless spending may leave you with little to no savings.
Living beyond your means results in the accrual of serious debt balances. These are high costs to pay to follow the path of others.
This may lead to short-term happiness but regret and serious financial issues usually follow.
“Some debts are fun when you are acquiring them, but none are fun when you are set about retiring them” Ogden Nash, American poet
The bottom line is that you have no duty to please others or make them envious of you. Their thoughts on your income status carry no legitimate bearing on your life. When you have money left over at the end of the month, you do not need to spend all of it.
Consider that many wealthy people, such as Warren Buffett, managed to resist the lifestyle inflation as they grew their wealth. He is one of the wealthier men in the United States, and he continues to live in the same house that he has owned for decades.
Self-Interest Is Not Selfishness
When you put the Joneses first in your life, you are putting your future security and well-being on the back-burner.
Efficient money management will not only improve your balance, but your health and relationships too.
Restructuring your spending and savings habits to focus on your own self-interest is not selfish. Instead, it is smart.
You never know what the future may bring. For example, you may have to handle a major health issue, losing a job or something else.
Your luxury car or brand name wardrobe will do little to pay the bills in these times. Rather than buying more than you need to appeal to others, save money so that you can enjoy greater security.
The Joneses Are Broke
While it is common to aim for social acceptance, remember those true friends will not judge you for not choosing consumerism. If they do, it is best to seek out other, less materialistic company.
When you have the strength and confidence to make wise financial decisions and to stand behind your frugal lifestyle, you may just wind up being the envy of your friends anyway.
Because of the commonness of consumer debt, the reality is that the Joneses are likely living well beyond their means.
They may be taking on debt to keep up the façade of wealth and success, but this will eventually catch up to them.
As their issues with debt increase, they may envy your strength to manage your funds and to live life on your own terms.
Your capacity to manage your funds is essential to your future financial security. Spending up to or beyond your means creates a situation where you have minimal or no savings and possibly mounds of debt.
This is a surefire path to financial disaster.
Now is the time to redefine what your financial goals are and to make smart adjustments to your spending habits.
Forge your own path rather than try to follow behind others who may be walking down a perilous path themselves.