Keeping up with the Joneses can crush your financial dreams. I see it far too often. Don’t let it happen to you.
Do you suffer from FOMO? Does it bother you seeing someone else with something nicer than you what you have? Keeping up with the Joneses is self-sabotage. Families continue to sacrifice future financial independence for the appearance of wealth today. In this article, I’ll discuss what Keeping up with the Joneses is, how it can hurt you, and what to do instead.
What does “Keeping up with the Joneses” mean?
You’ve heard this phrase before. But what does it mean? According to dictionary.com, it is “Striving to achieve or own as much as the people around you: “If you want to keep up with the Joneses in this neighborhood, you will have to own at least three cars.”
I can’t emphasize enough how big of a problem this is. Everyone seeks gratification, I get that. But you know who isn’t going to pay your bills in retirement? The Joneses. Chances are, they aren’t as well-off as they appear because they are trying to Keep up with the Smiths or some other family. Keeping up with the Joneses is all about appearances, not reality. Have you overspent on big ticket items because someone else has them?
“Comparison is the thief of joy.” -Theodore Roosevelt
How Trying to “Keep Up” Negatively Affects You
For starters, it steals your joy. One of the biggest negatives to trying to “keep up” is that it affects how you feel. Nothing is good enough. There is always a nicer, newer, shinier object that will get your attention. Yet, none of these things will make you happy. Stop focusing on them. Focus on the things in your life that will bring fulfillment and gratitude.
Financially, it’s a disaster. Trying to one-up those around you and project being rich is crushing many families. I meet with families often that are making six-figures but don’t have money saved for retirement. And worse, they have crippling consumer debt. Families get caught up trying to match their co-workers, their in-laws, etc. instead of trying to live THEIR best financial life.
Examples of how Keeping up with the Joneses manifests itself:
- Buying more house than you should.
- Constantly buying new cars and paying more than they should for them.
- Sending kids to colleges they can’t afford, often taking out or co-signing private loans in the process.
- Taking lavish vacations when you can’t afford it.
What to do Instead
I’m not trying to be a curmudgeon. I want you to enjoy your life and live it to the fullest. But don’t live above your means. If you do, you’re prioritizing instant gratification over your financial future.
Consider this, a $100/month investment that earns an average of 7% over thirty years would be worth over $120,000. Buying a slightly less expensive house or car and investing the difference can change the course of your financial future. This can snowball (in a good way) if you’re able to do the same with a 2nd car, or buying a house well below your means. You get the idea.
Fixed expenses are where people get into trouble. Mortgages and car payments that are too expensive leave you with little flexibility. Having a cash reserve, saving at least 10% of your income, and paying down consumer debt is your foundation. Do these before you start treating yourself to life’s luxuries. Keeping fixed expenses as low as possible is key. If times get tough, it’s easy to cancel HBO, postpone your gym membership, or stop shopping for new clothes. It’s much more difficult to sell your home and move, or switch up your automobiles.
Do you think you could go a few years with a paid-off car instead of buying a new one? Could you buy a slightly less expensive house? Chances are there may be a few areas where you could cut back. A few hundred dollars saved per month over the long-haul can be a game-changer.
Conclusion: Will Keeping up with the Joneses Crush Your Financial Dreams?
I promise you that when you are looking back at your life, you won’t care about the new car you bought 20 years earlier. If you have to live on a strict fixed-income in retirement, and can’t afford the things that you dreamt of, you’ll feel that pain everyday. It’s all about sacrifice. Sacrifice today so that you can live your best financial life later.Will 'Keeping up with the Joneses' crush your financial dreams? Click To Tweet
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