Keeping up with the Joneses has always been expensive, but the problem is way worse now that the internet has made us all neighbors.
Nearly two-thirds of Americans say they can't fathom how their peers afford the fancy vacations and cars they're posting about online, a survey from Mint found last year, and more than a third admit they're overspending to keep pace.
As the saying goes, comparison is the thief of joy. But Brent Weiss, co-founder of the financial advisory firm Facet Wealth, says the real mistake isn't comparing yourself to your friends — it's trusting what you see on social media in the first place.
Looking through a filter
Weiss says it’s easy to forget that Facebook and Instagram never tell the whole story.
“If we hop on to social media, there’s this different life that’s not reality presented to us… Everyone’s having a $50,000 wedding; everyone’s buying a big grand home,” says Weiss.
“But the reality of it is a lot of people are making very smart, informed decisions. It doesn’t mean they’re not having nice weddings, but they’re balancing that with the rest of their life.”
People don’t normally post online about their sacrifices or their smart investing habits. And they certainly won't post about their bad decisions, like how much debt they're taking on to cover their lifestyle.
A distorted image of your friends’ finances can be especially dangerous when you’re on the verge of a huge, emotional decision, like buying your first home.
“We tend to make very bad decisions as human beings. It doesn’t make us bad people — we just make bad decisions the bigger the decision is,” says Weiss. “If you’re experiencing a high level of emotion or stress, it’s actually proven that we’ll make worse decisions.”
What’s the antidote?
Weiss says the real problem people have isn’t poor planning — it’s not having a plan at all.
“One of the biggest mistakes we all make is we don’t set proper goals,” says Weiss. “And I say all of us because although I’m a financial planner, I still make mistakes.”
So what does a proper goal look like? The certified financial planner says to ask yourself three questions: what is it, how much is it and when do I need it?
“Then you can sit down and say, ‘Here’s how much we would need to save for the ideal situation,’ and then you can look at how this impacts the rest of your life,” says Weiss.
“Part of my job is to show you all your options and help you understand what trade-offs might need to be made down the road to help you achieve your goals.”
As for social media, Weiss advocates an “antisocial” policy when it comes to any financial decision. Turn off your phone, stop thinking about what others are doing and focus on your own values and goals.
Emotions are inevitable when you’re planning a wedding or buying a home, but falling back on the plan you’ve created with your financial adviser — or simply having a plan at all — can help cut through the fog.
How to speed up your savings
If you have a number of short- or medium-term goals you need a little budget boost to accomplish, you have a few options to generate extra income right now:
Slash your insurance premiums. When was the last time you looked around for a better price on your auto insurance? If it’s been a while, it may be costing you more than $1,000 extra every year. Shop around to ensure you’ve really got the best possible rate, then do the same to save hundreds on home insurance, too.
Save like a pro. Even if you put yourself on a lean budget, you’ll still need to stock up on supplies every now and then. And when that time comes, use a free browser extension that will scour the internet for lower prices and coupons so you’ll never overpay again.
Take on a side project. Have a special talent, like writing, drawing or voice acting? Remote and gig work is here to stay, so it’s never been easier to start a profitable side hustle and find buyers for your skills.
Turn pennies into a portfolio. Even if you don't have much money to spare, you can still earn returns from today’s hot stock market. A popular app will help you invest your “spare change” from everyday purchases in a diversified portfolio.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.