Do you remember the first time you went on Zillow? For many of us the initial draw to the real estate site wasn’t so we could buy or sell a home. We wanted to see how the value of our neighbors’ houses compared with ours.
We love to compare ourselves to others, especially in financial matters—even though we know it’s probably going to make us unhappy.
For example, you can’t help noticing when acquaintances always seem to be driving a new vehicle and going on far-flung trips and carrying around the latest gadgets. Meanwhile, you’re thinking twice about each item you put in your grocery cart.
It’s easy to assume your friends have a lot more money than you.
Vawn Himmelsbach, writing for YahooFinance, says that you’re not alone in feeling this way. Lots of people wonder how friends, family, and coworkers seem to be affording lavish lifestyles.1
One explanation is that they’re financing it. According to the Federal Reserve Bank of New York, household debt in the US has reached a mind-boggling $17.69 trillion. And last year, for the first time ever, credit card debt topped $1 trillion, and that’s with interest rates of 25% and more now common.
No wonder half of Americans (48.6%) consider themselves “broke.” And about two-thirds (66.2%) describe themselves as “living paycheck to paycheck.”
However, those acquaintances who dropped $2,000 on Taylor Swift tickets may not have gone into debt for them. Himmelsbach points out that more than half of working Americans report having an additional income source or “side hustle.” The younger they are, the more likely that is to be true, with 68% of millennials and 71% of Gen Z reportedly having one. But it’s common among older cohorts as well, with 32% of baby boomers saying they have an extra job.
Finally, you have to consider that the people you’re comparing yourself to aren’t getting extra money somewhere. Instead, they’re sacrificing in some other area of their life to afford the purchases you see.
Unfortunately for many, the area where they’re cutting back is in saving for retirement. In exchange for major purchases today, they’re sacrificing their financial security tomorrow.
With social media making it so easy for everyone to project the false image of an affluent lifestyle, it’s no wonder so many have the illusion that everyone else is better off.
It’s good to remember that if you knew the actual financial situation of the friends and family who seem to have it all, you probably wouldn’t feel nearly as envious.
Knowing this, the prudent investor will be happy when others are doing well. Focusing on what you can control rather than meaningless comparisons helps keep your focus on the more important goals of financial wellbeing today and a fully funded retirement in the future.
Working closely with a trusted fiduciary financial advisor, they will continue to believe that the most important financial details for them are the ones they can manage. And they will rely on their advisor’s guidance to maintain short-term discipline for the best chance of long-term success.
If you ever have any questions about your investments or retirement plans, please feel free to give me a call at 801-545-0696.
Regards,
Mark Lund
Stonecreek Wealth Advisors, Inc.
10421 South Jordan Gateway, Suite 600
South Jordan, UT 84095
Sources:
1. http://go.pardot.com/e/91522/rica-seems-more-105500103-html/95rynj/2500450941/h/m1dWK7Lq4TA7SsCLu-tlFzVeFB_NXrC-RPttfM5zLjM
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