We all know that comparison is the thief of joy. But is your habit of comparing yourself or your life to other people’s costing you in a more tangible way?
As in, costing you actual dollars and cents?
If you’re like most people, the answer is probably yes.
The Thing You Forget When You Start Comparing Yourself to Others
Comparing yourself and what you have to other people and their possessions can be a death trap for financial progress.
Why? Because you have no idea what other people’s inner financial lives look like. But that’s something we tend to forget when we practice our comparison habit.
You can look at someone’s beautiful home, carefully-appointed furniture, all their stuff and the fancy cars in the driveway and think, “Wow. If I only had that kind of money I would feel happy and successful too.”
What you forget is that just because someone looks rich doesn’t mean they’re wealthy. It’s really, really easy to be surrounded by stuff — and drowning in debt.
In fact, the more someone acts rich, meaning the more they buy and spend… the less likely the are to actually be rich in terms of meaningful assets and accumulating wealth.
That should be obvious. If you spend all your money, you won’t have any in the bank!
But you can get caught up in looking at symbols and signs of status to inform you about how “well off” someone is or isn’t. You compare and you find ways that you come up short.
Then you feel bad about yourself, your finances, your life — and that doesn’t put you in a good mindset to take the necessary actions to create and build wealth. It can become a self-fulfilling prophecy that way.
It can get even worse when those feelings do inspire you to take actions… but not the kind of action that helps your financial situation.
Why Comparison Causes You to Overspend
Some of the biggest financial mistakes I see people make are caused by their comparison habit. They look around and see what their peers are doing — or what someone they aspire to be does. And they want to keep up, so they spend to do just that.
After all, it’s really not fun to be the only person in the neighborhood who drives a 20-year-old Honda even if it works perfectly well when everyone else is cruising around in Audis. It doesn’t feel good to be the only person in the office without the latest gadget or piece of tech.
I get caught in this trap myself! Sometimes I feel weird being in a room full of financial advisors who are hundreds of thousands of dollars in debt thanks to the fact that they bought homes in the most expensive neighborhoods they could get mortgages in… and I just rent my condo in Boston.
But then I remember that it’s just a comparison trap and I refocus on what matters to me and what I can control, which is my own financial life.
Plenty of other people can’t do this though, and I get it: it’s hard because we have a human need to belong, to be part of the community or the group. So we spend on what everyone else spends on to keep up our status, our appearance, to keep buying into belonging.
Comparison is causing you to overspend. Think about it…
If you stopped looking at what others had and just focused on you, would you still feel the need to buy the latest clothes, electronics, cars, and so on?
Break Free and Focus on What Actually Matters
If you did, I’d bet you wouldn’t feel that impulse so much — and you might even be able to tune into what you really want or care about. And I guarantee that’s not stuff like fancy side tables or whatever other accessories you can buy for your house, your car, or yourself.
The stuff that matters is likely more along the lines of…
- Your family
- Your community
- Work that’s important to you
- Making a difference in someone’s life
- Creating or building new things
- Innovating or learning
- Traveling and other experiences
We just need to remember the truth about spending on material goods: they don’t make us happy. Spending on stuff (or worse, spending on what you think you should buy based on what other people think or say) won’t make you happy.
It usually causes the opposite: unhappiness. Dissatisfaction. A constant feeling like there’s not “enough.”
The people who are most satisfied — both personally and financially — are people who don’t need to spend to fulfill anything within themselves.
So before you get caught up comparing what you have, or don’t, to someone else, it might help to remember a few things:
- You don’t really know what’s going on behind the scenes of someone else’s financial life… or personal life, for that matter. People who appear happy might be dealing with some dark stuff that you don’t know about.
- Spending money to keep up with other people is not going to make you happy. It’s going to make you miserable, and probably broke too.
- Focus on what you care about because you care about it.
Focus on what you can control. That means you, your money, and how you use it.
You’ll not only make progress toward financial success that way, but you’ll probably also end up happier and more satisfied in the end.