Finances, Budgeting and Keeping up with the Joneses

The New York Times recently posted an article on finances and how many of us compare our own lot with those around us.  Too often, we might be reminded of what we don’t have rather than what we do, perhaps leading to feelings of ineptitude or inadequacy.  It’s human nature, I suppose, and these feelings might be more acute in the United States, where the individual is mythologized so vehemently with tales of the self-made millionaire.  We want to believe that what we have is a result of what we’ve earned, and if we don’t have as much as our neighbor, it must surely be because they’re doing something right and we’re doing something wrong.  I generally don’t harbor strong jealousies, but I must admit to being bewildered by the sheer volume of opulence that surrounds me in the Chicago suburbs.   Surely, there can’t be that many investment bankers and surgeons, can there?

But as the Times article highlights, when it comes to finances, things may be a bit more complicated than they appear.  A successful friend of mine once touted that he was a self-made achiever, failing to mention that his parents had paid for his college education and his first car.  People can be very sanctimonious when it comes to finances.  Sure, some people are well-off and have earned every penny, but for others wealth might be – in part – due to a sizeable inheritance or familial assistance with a home purchase or college expense.  Hell, if my wife and I hadn’t saved money for our three kids to go to college, we might be living a fairly opulent lifestyle too!  For others, opulence might merely be a mirage paid for with massive amounts of debt.

Regardless of the circumstances, we all make financial decisions, and it’s important to align those choices with our values.  Far too many of us make short-sighted and boneheaded financial choices, as I’ve written about before, but if your choices are guided by your values, then it doesn’t matter what your neighbor has or doesn’t have: you’ll be putting your money where it matters most to you.

So as you drive past your neighbor’s house, keep in mind that they might not have saved for college tuition as you did, or that they don’t put away a large percentage of their income for retirement as you do, or they don’t give a sizeable amount of money to charity as you do.  Or maybe they do and still have enough leftover for a Tesla and a luxury vacation to Tahiti.  If so, good for them! 

And if you’re someone who hasn’t been able to do any of the above, who maybe has made poor decisions in the past, try making a financial plan according to your values, align your choices according to that plan, and stick to it as best you can without worrying about keeping up with the Joneses.  You might find that you have more money available than you realize to put towards what’s important to you. And consider reading my blog from three years ago about twenty pieces of financial advice that I wrote for my children.

The Times article mentioned a blog I had never heard of before: Mr. Money Mustache.  Next week I’ll write about this, the FIRE movement it espouses, and some personal money-saving strategies I’ve found useful.